Gifts Versus Debts

On the other hand, the advantage of distributing profits to one's employees is that this distribution may be made to take the form of a reward for exceptional merit. In this sense the money so distributed ceases to be a gift and becomes part of the earnings of the individual thus furnishing an incentive to him for greater effort. In every successful business, there are, to say the least, individuals whose loyalty, initiative, and ambition determine the progress and expansion of the business. These individuals, in only a slightly less degree than the owner of the business, are the foundations upon which the success of the business stands. With certain limitations, no price is too great to reward these individuals for their constructive qualities.

We have been experimenting in this country for nearly two generations with so-called "profit-shar-ing." Probably more systems have been abandoned than are now in opertion. Out of the whole experience, however, we have learned that there are certain forms of profit sharing which have a really vital relation to the success of the business. Any form of profit sharing which really divides profits between the employer and his responsible employees can be defended not only on business principles, but on the basis of developing those who receive it. Money so distributed is not a gift; it is earned. When the employer distributes his profits in this way, he recognizes the debt which he owes for his own success to those who have stood with him in building it up.

Beyond this there is another debt which the rich man, by the distribution of his profits, may be able to discharge. The relation of the employee who work for wages to business and to society is fundamentally different from that of the man who works for profits or of the responsible employee who is directly concerned with the progress of the business. Equally with the employer and with the responsible employee, these thousands of lesser workers are putting their life into their labor. Their life is their capital. Often the wages for which they work do not allow the accumulation of funds to take care of their old age.

Still, in any well ordered society, it should be taken for granted that a life of industry, however humble the level upon which it is lived, should secure to the worker some kind of reasonable comfort in his declining years. The distribution of profits to take care of this situation may again be classed as the paying of a debt rather than as the distribution of a gratuity. The humblest employee who, through long years of service, has contributed his mite to the success of the business may be entitled to something over and above what he or she may have received as wages. This equity is often ignored; in fact, it is customarily ignored. One of the greatest opportunities which an employer has, in my conception, is the discharge of this often neglected obligation.

What About The Residue

When all of this has been done, however, there still remains in the employer's hands a considerable amount of profits which he does not need himself, which cannot be distributed among his employees as a reward for services actually rendered, and of which the employer must find some way of disposing. Of course, such a man will become a large supporter toward the current expenses of such reasonable charities as may be presented to him. For the further remainder of the funds which he wishes to distribute, I earnestly advocate the use of such moneys for the development and encouragement of enterprises which present the largest amount of enduring usefulness and which give employment and satisfaction to the greatest number of people.

The one thing to be avoided is the creation of dead funds. A dollar which merely stays on the shelf from year to year and through all time contributes its yearly earnings to the support of some charitable purpose may become, in fact, a dead dollar. That same dollar, if set in motion by a rich man, preferably in some enterprise which immediately gives employment to hundreds and thousands of workers, is a live dollar. We have already too much money in the United States which hangs like a weight about the neck of society and is just as dead as, in many cases, is the memory of the man who originally hung it up. A rich man should study this situation with the greatest care. Such wisdom as he has been endowed with should be applied conscientiously to the effort to keep his funds liquid in the social sense.

The upshot of these statements is this: Let the emphasis of our distribution be placed upon the side of earnings rather than upon the side of gifts. Insist so far as possible that what we distribute shall be distributed for some recognized service. Furthermore, when it comes to benevolences, make sure as far as possible that these shall be constructive benevolences; - benevolences which supply employment and incentive to the greatest number of people rather than those which merely distribute sops to a promiscuous crowd.

We can never free ourselves entirely from the mere giving away of money, but the emphasis of our benevolences can be placed upon such handling of money as will reward efficiency wherever it is found, and will keep such money as passes through our hands active. Thus we may recognize to the fullest degree the idea that we are stewards, - trustees, - and not owners of the money which passes through our hands. Only as we get this point of view can we enjoy the most enduring of investments.