CHAPTER 26.

On a New System of Manufacturing

305. A most erroneous and unfortunate opinion prevails
amongst workmen in many manufacturing countries, that their own
interest and that of their employers are at variance. The
consequences are that valuable machinery is sometimes neglected,
and even privately injured--that new improvements, introduced by
the masters, do not receive a fair trial--and that the talents
and observations of the workmen are not directed to the
improvement of the processes in which they are employed. This
error is, perhaps, most prevalent where the establishment of
manufactories has been of recent origin, and where the number of
persons employed in them is not very large: thus, in some of the
Prussian provinces on the Rhine it prevails to a much greater
extent than in Lancashire. Perhaps its diminished prevalence in
our own manufacturing districts, arises partly from the superior
information spread amongst the workmen; and partly from the
frequent example of persons, who by good conduct and an attention
to the interests of their employers for a series of years, have
become foremen, or who have ultimately been admitted into
advantageous partnerships. Convinced as I am, from my own
observation, that the prosperity and success of the master
manufacturer is essential to the welfare of the workman, I am yet
compelled to admit that this connection is, in many cases, too
remote to be always understood by the latter, and whilst it is
perfectly true that workmen, as a class, derive advantage from
the prosperity of their employers, I do not think that each
individual partakes of that advantage exactly in proportion to
the extent to which he contributes towards it; nor do I perceive
that the resulting advantage is as immediate as it might become
under a different system.

306. It would be of great importance, if, in every large
establishment the mode of payment could be so arranged, that
every person employed should derive advantage from the success of
the whole; and that the profits of each individual should
advance, as the factory itself produced profit, without the
necessity of making any change in the wages. This is by no means
easy to effect, particularly amongst that class whose daily
labour procures for them their daily food. The system which has
long been pursued in working the Cornish mines, although not
exactly fulfilling these conditions, yet possesses advantages
which make it worthy of attention, as having nearly approached
towards them, and as tending to render fully effective the
faculties of all who are engaged in it. I am the more strongly
induced to place before the reader a short sketch of this system,
because its similarity to that which I shall afterwards recommend
for trial, will perhaps remove some objections to the latter, and
may also furnish some valuable hints for conducting any
experiment which might be undertaken.

307. In the mines of Cornwall, almost the whole of the
operations, both above and below ground, are contracted for. The
manner of making the contract is nearly as follows. At the end of
every two months, the work which it is proposed to carry on
during the next period is marked out. It is of three kinds. 1.
Tutwork, which consists in sinking shafts, driving levels, and
making excavations: this is paid for by the fathom in depth, or
in length, or by the cubic fathom. 2. Tribute, which is payment
for raising and dressing the ore, by means of a certain part of
its v alue when rendered merchantable. It is this mode of payment
which produces such admirable effects. The miners, who are to be
paid in proportion to the richness of the vein, and the quantity
of metal extracted from it, naturally become quicksighted in the
discovery of ore, and in estimating its value; and it is their
interest to avail themselves of every improvement that can bring
it more cheaply to market. 3. Dressing. The 'Tributors', who dig
and dress the ore, can seldom afford to dress the coarser parts
of what they raise, at their contract price; this portion,
therefore, is again let out to other persons, who agree to dress
it at an advanced price.

The lots of ore to be dressed, and the works to be carried
on, having been marked out some days before, and having been
examined by the men, a kind of auction is held by the captains of
the mine, in which each lot is put up, and bid for by different
gangs of men. The work is then offered, at a price usually below
that bid at the auction, to the lowest bidder, who rarely
declines it at the rate proposed. The tribute is a certain sum
out of every twenty shillings' worth of ore raised, and may vary
from threepence to fourteen or fifteen shillings. The rate of
earnings in tribute is very uncertain: if a vein, which was poor
when taken, becomes rich, the men earn money rapidly; and
instances have occurred in which each miner of a gang has gained
a hundred pounds in the two months. These extraordinary cases,
are, perhaps, of more advantage to the owners of the mine than
even to the men; for whilst the skill and industry of the workmen
are greatly stimulated, the owner himself always derives still
greater advantage from the improvement of the vein.(1*) This
system has been introduced, by Mr Taylor, into the lead mines of
Flintshire, into those at Skipton in Yorkshire, and into some of
the copper mines of Cumberland; and it is desirable that it
should become general, because no other mode of payment affords
to the workmen a measure of success so directly proportioned to
the industry, the integrity, and the talent, which they exert.

308. I shall now present the outline of a system which
appears to me to be pregnant with the most important results,
both to the class of workmen and to the country at large; and
which, if acted upon, would, in my opinion, permanently raise the
working classes, and greatly extend the manufacturing system.

The general principles on which the proposed system is
founded, are

1. That a considerable part of the wages received by each
person employed should depend on the profits made by the
establishment; and,

2. That every person connected with it should derive more
advantage from applying any improvement he might discover, to the
factory in which he is employed, than he could by any other
course.

309. It would be difficult to prevail on the large capitalist
to enter upon any system, which would change the division of the
profits arising from the employment of his capital in setting
skill and labour in action; any alteration, therefore, must be
expected rather from the small capitalist, or from the higher
class of workmen, who combine the two characters; and to these
latter classes, whose welfare will be first affected, the change
is most important. I shall therefore first point out the course
to be pursued in making the experiment; and then, taking a
particular branch of trade as an illustration, I shall examine
the merits and defects of the proposed system as applied to it.

310. Let us suppose, in some large manufacturing town, ten or
twelve of the most intelligent and skilful workmen to unite,
whose characters for sobriety and steadiness are good, and are
well known among their own class. Such persons will each possess
some small portion of capital; and let them join with one or two
others who have raised themselves into the class of small master
manufacturers, and, therefore possess rather a larger portion of
capital. Let these persons, after well considering the subject,
agree to establish a manufactory of fire-irons and fenders; and
let us suppose that each of the ten workmen can command forty
pounds, and each of the small capitalists possesses two hundred
pounds: thus they have a capital of L800 with which to commence
business; and, for the sake of simplifying, let us further
suppose the labour of each of these twelve persons to be worth
two pounds a week. One portion of their capital will be expended
in procuring the tools necessary for their trade, which we shall
take at L400, and this must be considered as their fixed capital.
The remaining L400 must be employed as circulating capital, in
purchasing the iron with which their articles are made, in paying
the rent of their workshops, and in supporting themselves and
their families until some portion of it is replaced by the sale
of the goods produced.

311. Now the first question to be settled is, what proportion
of the profit should be allowed for the use of capital, and what
for skill and labour? It does not seem possible to decide this
question by any abstract reasoning: if the capital supplied by
each partner is equal, all difficulty will be removed; if
otherwise, the proportion must be left to find its level, and
will be discovered by experience; and it is probable that it will
not fluctuate much. Let us suppose it to be agreed that the
capital of L800 shall receive the wages of one workman. At the
end of each week every workman is to receive one pound as wages,
and one pound is to be divided amongst the owners of the capital.
After a few weeks the returns will begin to come in; and they
will soon become nearly uniform. Accurate accounts should be kept
of every expense and of all the sales; and at the end of each
week the profit should be divided. A certain portion should be
laid aside as a reserved fund, another portion for repair of the
tools, and the remainder being divided into thirteen parts, one
of these parts would be divided amongst the capitalists and one
belong to each workman. Thus each man would, in ordinary
circumstances, make up his usual wages of two pounds weekly. If
the factory went on prosperously, the wages of the men would
increase; if the sales fell off they would be diminished. It is
important that every person employed in the establishment,
whatever might be the amount paid for his services, whether he
act as labourer or porter, as the clerk who keeps the accounts,
or as bookkeeper employed for a few hours once a week to
superintend them, should receive one half of what his service is
worth in fixed salary, the other part varying with the success of
the undertaking.

312. In such a factory, of course, division of labour would
be introduced: some of the workmen would be constantly employed
in forging the fire-irons, others in polishing them, others in
piercing and forming the fenders. It would be essential that the
time occupied in each process, and also its expense, should be
well ascertained; information which would soon be obtained very
precisely. Now, if a workman should find a mode of shortening any
of the processes, he would confer a benefit on the whole party,
even if they received but a small part of the resulting profit.
For the promotion of such discoveries, it would be desirable that
those who make them should either receive some reward, to be
determined after a sufficient trial by a committee assembling
periodically; or if they be of high importance, that the
discoverer should receive one-half, or twothirds, of the profit
resulting from them during the next year, or some other
determinate period, as might be found expedient. As the
advantages of such improvements would be clear gain to the
factory, it is obvious that such a share might be allowed to the
inventor, that it would be for his interest rather to give the
benefit of them to his partners, than to dispose of them in any
other way.

313. The result of such arrangements in a factory would be,

1. That every person engaged in it would have a direct
interest in its prosperity; since the effect of any success, or
falling off, would almost immediately produce a corresponding
change in his own weekly receipts.

2. Every person concerned in the factory would have an
immediate interest in preventing any waste or mismanagement in
all the departments.

3. The talents of all connected with it would be strongly
directed to its improvement in every department.

4. None but workmen of high character and qualifications
could obtain admission into such establishments; because when any
additional hands were required, it would be the common interest
of all to admit only the most respectable and skilful; and it
would be far less easy to impose upon a dozen workmen than upon
the single proprietor of a factory.

5. When any circumstance produced a glut in the market, more
skill would be directed to diminishing the cost of production;
and a portion of the time of the men might then be occupied in
repairing and improving their tools, for which a reserved fund
would pay, thus checking present, and at the same time
facilitating future production.

6. Another advantage, of no small importance, would be the
total removal of all real or imaginary causes for combinations.
The workmen and the capitalist would so shade into each other--
would so evidently have a common interest, and their difficulties
and distresses would be mutually so well understood that, instead
of combining to oppress one another, the only combination which
could exist would be a most powerful union between both parties
to overcome their common difficulties.

314. One of the difficulties attending such a system is, that
capitalists would at first fear to embark in it, imagining that
the workmen would receive too large a share of the profits: and
it is quite true that the workmen would have a larger share than
at present: but, at the same time, it is presumed the effect of
the whole system would be, that the total profits of the
establishment being much increased, the smaller proportion
allowed to capital under this system would yet be greater in
actual amount, than that which results to it from the larger
share in the system now existing.

315. It is possible that the present laws relating to
partnerships might interfere with factories so conducted. If this
interference could not be obviated by confining their purchases
under the proposed system to ready money, it would be desirable
to consider what changes in the law would be necessary to its
existence: and this furnishes another reason for entering into
the question of limited partnerships.

316. A difficulty would occur also in discharging workmen who
behaved ill, or who were not competent to their work; this would
arise from their having a certain interest in the reserved fund,
and, perhaps, from their possessing a certain portion of the
capital employed; but without entering into detail, it may be
observed, that such cases might be determined on by meetings of
the whole establishment; and that if the policy of the laws
favoured such establishments, it would scarcely be more difficult
to enforce just regulations, than it now is to enforce some which
are unjust, by means of combinations either amongst the masters
or the men.

317. Some approach to this system is already practised in
several trades: the mode of conducting the Cornish mines has
already been alluded to; the payment to the crew of whaling ships
is governed by this principle; the profits arising from fishing
with nets on the south coast of England are thus divided:
one-half the produce belongs to the owner of the boat and net;
the other half is divided in equal portions between the persons
using it, who are also bound to assist in repairing the net when
injured.

NOTES:

1. For a detailed account of the method of working the Cornish
mines, see a paper of Mr John Taylor's Transactions of the
Geological Society, vol. ii, p. 309.