First, for the reason that the “Piece Rate System” is later than Schloss’ book, Schloss being 1891, and the “Piece Rate” being 1895; in the second place that we are following the Scientific Management side in distinction to the general economic side, laid down by Schloss.  There is, however, nothing in our plan of discussion here to prevent one’s following fairly closely in the Schloss also.

THE GAIN-SHARING PLAN.—­We take up, then, the Gain-sharing Plan which was invented by Mr. Henry R. Towne and used by him with success in the Yale & Towne works.  This is described in a paper read before the American Society of Mechanical Engineers, in professional paper No. 341, in 1888 and also in the Premium Plan, Mr. Halsey’s modification of it, described by him in a paper entitled the “Premium Plan of Paying for Labor,” American Society of Mechanical Engineers, 1891, Paper 449.  In this, in describing the Profit-sharing Plan, Mr. Halsey says—­“Under it, in addition to regular wages, the employes were offered a certain percentage of the final profits of the business.  It thus divides the savings due to increased production between employer and employe.”

OBJECTIONS TO THIS PLAN.—­We note here the objection to this plan:  First,—­“The workmen are given a share in what they do not earn; second, the workmen share regardless of individual deserts; third, the promised rewards are remote; fourth, the plan makes no provision for bad years; fifth, the workmen have no means of knowing if the agreement is carried out.”  Without discussing any farther whether these are worded exactly as all who have tried the plan might have found them, we may take these on Mr. Halsey’s authority and discuss the psychology of them.  If the workmen are given a share in what they do not earn, they have absolutely no feeling that they are being treated justly.  This extra reward which is given to them, if in the nature of a present, might much better be a present out and out.  If it has no scientific relation to what they have gotten, if the workmen share regardless of individual deserts, this, as Dr. Taylor says, paragraph 27 in the “Piece Rate System,” is the most serious defect of all, in that it does not allow for recognition of the personal merits of each workman.  If the rewards are remote, the interest is diminished.  If the plan makes no provision for bad years, it cannot be self-perpetuating.  If the workmen have no means of knowing if the agreement will be carried out or not, they will be constantly wondering whether it is being carried out or not, and their attention will wander.

THE PREMIUM PLAN.—­The Premium Plan is thus described by Mr. Halsey—­“The time required to do a given piece of work is determined from previous experience, and the workman, in addition to his usual daily wages, is offered a premium for every hour by which he reduces that time on future work, the amount of the premium being less than his rate of wages.  Making the hourly premium less than the hourly wages is the foundation stone upon which rest all the merits of the system.”