Old Account of Employee Ownership at Proctor & Gamble Worth a Look

Procter & Gamble set up an employee ownership plan in 1903 that allowed employees to buy stock for a 2.5% down payment, with the rest borrowed from the company, but repaid out of profit sharing (a 12% or more "dividend" on wages available only to those buying stock). The plan was not available to more highly paid employees. P&G would buy the stock back at the purchase price if the employee left and the stock had dropped in value. An absolutely fascinating account of the plan and the social attitudes of the time can be found in the 1914 book The World's Work in the chapter on profit sharing (click here to read it at Google Book Search).

The chapter's author, Janet Ruth Rankin, discusses how employees at the company commonly accumulated several years' or more in pay in stock value through the plan. "If you should see a workman whose weekly wage was $15, and were told the he owned $10,000 worth of stock earning 7%, yearly, your explanation of the fact would probably be that he had a rich and dead relative." But Rankin says it happened often at the company. She describes "Henry B________," who "came into the employ of the company as a more than incipient drunkard." But inspired by a coworker prospering in the plan, he started buying shares. "With the very first payment came a sense of security from financial worries-those things that drive many a poor workman to drink-and a real reason for saving kept Henry away from old haunts." Rankin writes that "profit sharing represents the democratic idea in relation of employer to employee and of employee to the business. And the democratic idea is the only idea that will work out in this democratic country."

The chapter is also fascinating as social history. Rankin, for instance, writes that some of the P&G employees are "Negroes who are employed in the company's Southern plants and are too ignorant to enter upon the profit sharing plan." Later, writing about women at the plant (some of whom, she says, have accumulated large sums in stock), she says they are, in general, "no more emancipated than their sisters of Boston. They do not think first of earning a stake for the future, if they think at all. More often, their families, who take their wages, think for them."