The Procter & Gamble Company.
The Procter & Gamble Company.

Cincinnati: The Queen City 1788-1912; Vol. 4
by Charles Frederick Goss
S. J. Clarke Publishing Co. Chicago / Cincinnati,. 1912

transcribed by Tina Hursh

pgs 10-14

     The Procter & Gamble Company ranks as one of the greatest and most perfectly conducted manufacturing concerns of America, if not of the world.  This distinction has been gained by many years of skillfull management and today the products of its factories are recognized as standard where ever the name is known.  Practically three-quarters of a century has elapsed since the company entered upon its career, the partners little dreaming at the outset that the whole world would become the theater of their operations.  Adapted in a remarkable degree for the business, they resolutely applied themselves and notwithstanding the financial panic of 1857, 1873, and 1893 and temporary  reverses which are inevitable in the development of every kimportant enterprise, they bravely faced every obstcle and the great plant at Ivorydale stands as an enduring monument to their genius and foresight.
     In 1890 the firm of Procter & Gamble was incorporated as the Procter & Gamble Company. the leading officers at the time of its incorporation were William A. PROCTER, president; James N. GAMBLE, first vice president: Harley T. PROCTER, second vice president; David B. GAMBLE, secretary and treasurer; Wm. T. Cooper PROCTER, genearl manager, all of whom represented the second generation of the families in the business.  Having been identified with the business almost from their boyhood, they were well prepared at the outset to take up the work which their fathers had so ably conducted and to carry it forward upon even a larger scale than before had been attempted.  This magnificent enterprise is a splendid example of achievement in the industrial world through the combined efforts of men actuated by high ideals and working harmouniously together for a common purpose.  The Procter & Gamble Company is notable especially for its attention to the welfare of its employees-it was the first n this section of the country to establish the Saturday half-holiday throughout the year, and its efforts to devise a satisfactory plan of profit sharing for its employees is known the country over.
     The profit-sharing plan of the company, which has borne the test of a number of years, has attracted great interest and it is believed by many students of economic conditions that this system will ultimately be applied by leading business organizations all over the country.  Already its beneficial effects are to be witnessed in several of the states and a description of the plan and its practical application cannon fail to be of general interest.
     A profit-sharing plan was tried first n the factory of the firm of Procter & Gamble in the year 1887; at that time it consisted, in effect, of a semi-annual distribution  of cash, in amount equal to a percentage of the emplyee's wages, the rate of dividend being dependent upon the earnings of the firm; later, after the incorporation of the Procter & Gamble' Company, n 1890, the rate was fixed the same a s that paid upon the common stock of the company.  The profit-sharing plan at first was extended to all employees, but very soon was limited to these earning fifteen hundred dollars per annum or less.  The weakness of the plan mentioned above was that in a large percentage of the cases no portion of the profit-sharing dividend was either invested or saved - there was no enforced saving, so that after a few years the employees came to look upon their profit-sharing dividend as a part of their income upon which they could rely in much the same manner as their salary.
     For this, and other reason, the necessity for a radical change was felt, and in the year 1903 a plan for dividends through stock ownership was adopted, which, with slight modifications, is in force at the present time, and may be considered, so far as this business in concerned, an unqualified success.  The plan requires that an employee, to be eligible for profit-sharing dividend, must own common stock of the company, at it market value, to the amount of a year's salary; if the employee does not own this amount of stock the company will buy it for him, requiring a small payment in cash when the purchase is made, and a moderate annual payment each year, until the stock is paid for in full, interest in the meantime being charged against the employee on his unpaid balance at the rate of three per cent per annum.  The employee is guaranteed by the company against loss through decline in the market value of the stock, and receives as credits the dividends on the stock and a profit-sharing dividend of twelve per cent which is applied toward the payment of his stock until same is paid for in full, after which the ownership of the stock is vested in teh employee, and all dividends are paid to him in cash.
     After the employee has been a participant n the plan, or an owner of the common stock of the company for five years, he is entitled to subscribe for twenty-five percent additional stock and to receive a profit-sharing dividend at the rate of fifteen per cent, and after ten years to subscribe for a further twenty-five percent and receive a profit-sharing dividend of eighteen percent.
     The majority of the employees of the company have taken advantage of this opportunity, and are receiving profit sharing dividends as well as the regular dividends which are paid to all holders of the common stock of the company.  The employees are now the actual owners of approximately two thousand five hundred shares of stock, upon which the present market value is about one million dollars.
     In answer to an inquiry as to how profit sharing would work in the event of the business sustaining a loss, one of th managers of the company says: "We have been fortunate in our business and have always been able to show a balance on the right side of the ledger at the end of each year, so that the question has never presented itself for action.  the developer of the plan, however, believes that the employees should not stand any proportion of the loss.  The wages they receive are paid them for the ordinary efforts that laborers usually exert.  The profit-sharing dividend is paid them for the extraordinary labor and care which they give in return for the dividend.  Under these conditions, if the business at a ny time should show a loss, the company can see no reason why the employee should stand a proportion of it, because in reality they do sustain a loss from the fact that they have given extra labor and care, for which they receive no compensation.  The capital invested would certainly be no worse off than in a business where the profit sharing was not in force, but on the contrary would have received from employees better service than they would have given, if such a system were not n force and their loss is less than it otherwise would have been.  Under these conditions the company thinks it would be a wrong and a hardship to ask the employee to bear any proportion of such loss."
     During the twenty-one years which have elapsed since the incorporation of The Procter & Gamble Company, there have been comparatively few changes in its principal officers; Mr. William A. PROCTER, at his death, was succeeded by his son, Mr. Wm. Cooper PROCTER, as president; Mr. James N. GAMBLE has retained the vice presidency since the incorporation of the company; the office of second vice president has been discontinued; the office of secretary has been filled for a number of years by Mr. Hastings L. FRENCH, who succeeded Mr. David B. GAMBLE; Mr. J.H. FRENCH succeeded Mr. David B. GAMBLE as treasurer, shortly after the company was formed and at his death in 1903 was succeeded by son, Mr. Herbert G. FRENCH; the office of assistant secretary was created and is now filled by Mr. Harry W. BROWN, and Mr. John J. BURCHENAL is the present general manager.

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