S. J. Clarke Publishing Co. Chicago / Cincinnati,. 1912
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.