On the Economy of Machinery and Manufactures

by Charles Babbage

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.