A NEW ZEALAND PROFIT-SHARING SCHEME.
[To the Editor of the SPECTATOR.] SIR,—The North of England papers have been taking note of the annual report of a wool manufacturing enterprise, that of Messrs. J. T. and J. Taylor, Ltd., of Batley. This is a profit-sharing concern in which the employees own more than half the capital and receive three-quarters of the profits. The annual report calls the year a disappointing and unprofit- able one, the worst since 1898. In spite of this, and in the hope that the worst of the depression is over, they are paying a dividend of seven and a-half per cent. Automatically and because of the profit-sharing system this means a labour bonus of two and a-half per cent. on salaries and wages, and five per cent. to double bonus receivers (namely, those of not less than twenty-one years of age who have been with the company at least five years and own shares equal to half a year's wages). All these labour bonuses may be taken out in cash or shares. These facts suggest to me that those interested in profit-sharing may be glad to hear of a Dominion profit-sharing scheme. It is the invention of Mr. H. Valder, managing director of a butter box factory in Hamilton, New Zealand. So much did Mr. Valder impress Mr. Massey with the value of his scheme as a preventive of industrial strife that the N.Z. Prime Minister himself backed a Bill introduced into the N.Z. Parliament to enable companies to be formed on the Valder lines.
The Round Table, the review which keeps its finger on the pulse of Dominion affairs, has declared that the remedy for our ills is to be found in the workers becoming capitalists. Mr. Valder's interpretation of this idea is expressed by him in these words : " It is possible to assess approximately the value of capital, and we know that surplus profit (if any) is due entirely to the ability and energy exhibited by Labour in using the inert and material thing, Capital. The scheme I wish to adopt is to limit the reward of capital, insure it against loss, and then pay the surplus to the human element in pro- portion to the service rendered by every individual employed in the business. This is a reversal of the present practice under which owners of capital are the residual legatees." Mr. Valder's scheme is, briefly, that the earnings of capital shall be restricted to the current bank rate, plus a " risk rate " conditioned by the type of enterprise. Mr. Valder himself makes three broad classes, manufacturing companies, trading concerns and professional firms, and puts equally broadly the " risk rate at three. two and eight per cent. respectively. He makes, too, a further exception in the case of the professional firm in that he would have the labour dividend specially allocated. In general, the labour dividend is distributed to the employees in proportion to their salaries and wages, but in the case of a professional firm he would " weight " the dividends of the professional heads of depart- ments, since on them depends to a much greater extent than in trade and commerce the profit-earning capacity of the firm.—I am, Sir, &c., E. L. C. WATSON. 26 Thurleigh Road, S.W. 12.
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