² See, for example, Bishop, J. L., A History of American Manufacturing (Philadelphia, 1864), II, 742Google Scholar; Church, W. C., “American Arms and Ammunition,” Scribner's Monthly, XIX (January 1880), 443Google Scholar; Deyrup, F. J., Arms Makers of the Connecticut Valley (Northampton, 1948), pp. 101–2, 149–50, 161–62Google Scholar; Duncan, J. C., Principles of Industrial Management (New York, 1911), p. 219Google Scholar; Greene, C. M., “Light Manufactures and the Beginnings of Precision Manufacture Before 1861,” in The Growth of the American Economy, ed. Williamson, H. F. (New York, 1946), p. 247Google Scholar; Hubbard, G., Pioneer Machine Builders, The Mechanics of the Windsor Region and Their Industries (mimeo., Windsor, Vermont, 1922), pp. 56–57Google Scholar, 127; Richards, J., “Compensation of Skilled Labor,” in The Making of America, ed. LaFollette, Robert M. (Chicago, 1906), p. 283Google Scholar; Roe, J. W., English and American Tool Builders (New Haven, 1916), p. 178Google Scholar.

³ As late as 1910 the system was still used in such well-known plants as Eli Whitney, Robbins and Lawrence, Brown and Sharp, Colt, Remington, Singer, Pratt and Whitney, as well as in many lesser known plants up and clown the Connecticut Valley.

⁴ For example, Richards, “Compensation of Skilled Labor,” p. 276, reports that in 1886 it was impossible to ascertain anything about wages in several English plants “because the work was contracted.” My colleague, Professor W. Jaffe, reports that at least as recently as 1929 the Zwilling-Fabrick at Solingen was operated under a variation of the contract system. Incidentally, Professor Lane reports that inside contracting was used as early as the fifteenth century in the Venetian arsenal.—Lane, F. C., Venetian Ships and Shipbuilders of the Renaissance (Baltimore: The Johns Hopkins Press, 1934), pp. 115, 200–5Google Scholar, passim.

⁵ Nathan Starr, who was given a contract to make swords in the Springfield armory during 1798, seems to have been the first of such men. He even gave subcontracts to individuals in his own Middlctown shop to furnish some of the forgings and the scabbards for the job.—Deyrup, Arms Makers, pp. 43–45.

⁶ For example, gun barrels first had to be forged, then drilled, machined, filed, fitted with sights, and finally either blued or browned. At Winchester a separate contractor was in charge of each of these operations by 1880.

⁷ In 1881, for example, while only 48 per cent of those in the gun shop worked for contractors, 57 per cent of the total gun-shop payroll went to contractors and their employees. This is exclusive of the machine shop where 12 per cent of the gun-shop labor force worked under a variation of the contract system.

⁸ The discussion of the contract system in this paper is based largely on data pertaining to the gun shop. Information on the other equally important division of the plant, the cartridge shop, was incomplete. It is clear, however, that the system operated in substantially the same manner in both places.

⁹ This is the earliest year for which the data permit the construction of such an account. As can be seen, Russell's income consisted of day pay and profit. The day pay was his salary from W.R.A. as a contractor; profit was the difference between revenue and costs.

¹⁰ If Russell had incurred a loss rather than a profit, the company would either have split the difference with him or carried the whole amount on his account until it was wiped out by future profits. Their decision would depend on the reason for the loss and the power possessed by Russell.

¹¹ This incentive system was also used by the contractors who paid their employees on a piece-rate basis. Since the contract system was fairly widespread during a large part of the last century, this may partially explain why early wage data arc so hard to find.

¹² Roe, English and American Tool Builders, and Hubbard, Pioneer Machine Builders, have reasoned from this that the contract system provided a favorable environment for the ingenious individual. Both authors then deduce that the system was largely responsible for many of America's ingenious entrepreneurs and inventors. There can be no particular quarrel with the initial statement but the deduction is spurious.

¹³ Section I of chart: An index of the prices received by the contractors for finished components sold to the company. The prices received by each contractor were weighted by the total credits paid into his account by W.R.A. The reader should guard apain.it the tendency to use this index as a measure of total production costs. However, it is a reasonably accurate measure of labor cost, as the following table referring to the model 73 carbine indicates:

The wholesale price index is the one calculated by Warren and Pearson. See Bureau of the Census, Historical Statistics of the United States, 1789–1945 (Washington, 1949), series L2.

Section II of chart: “All employees” includes the employees of the contractors, the employees of W.R.A. (including foremen), and the contractors themselves. Average annual earnings have been adjusted for changes in the cost of living. For this purpose the Federal Reserve Bank of New York's “cost of living index” was used. See ibid., series L36.

Section III of chart: “Earnings” includes day pay as well as profits. Profits were allocated to the year in which earned rather than to the year in which the contractor drew them out of his account. “Large contractors” were those employing more than twenty workmen each. For a fuller description of the categories “small” and “large,” see page 216. The data on which this chart was based were also adjusted for changes in the cost of living.

¹⁴

¹⁵ For the period 1881–93, Tilton's income as a contractor had averaged $10,380 a year. This was more than the salary of any official, except the president of the company.

¹⁶ It was entirely possible for a machinist to act as a contract one month and as a contractor's helper the next month.

¹⁷ Faced with similar difficulties, the Colt Company at Hartford began setting minimum wages which the contractors were forced to meet.—Deyrup, Arms Makers, p: 101. At W.R.A. there is no evidence that this method was used.

¹⁸ Students of labor history will remember that the period around 1900 was one of labor unrest, especially among the skilled workers of New England and the Middle Atlantic States. At W.R.A., however, the initial threat was easily handled by firing the six machinists who acted as ringleaders and posting a strong letter on all company bulletin boards. Actually, union sentiment in the plant could not have been too strong during this period, since W.R.A. workers were quite willing to ride on trolleys which were specially arranged for by W.R.A. during the New Haven trolley strike of 1902.

¹⁹ From the beginning, Tilton's clerk made a special notation after the names of all those suspected of union activity and all those fired for reasons which would militate against rehiring. The notation used is rather amusing—robal, which is labor spelled backwards.

²⁰ Part of the prestige accorded the contractors in the community seems to have come from their ability to provide jobs for friends, relatives, and neighbors.

²¹ Hearings Before Special Committee of House to Investigate Taylor and Other Systems of Shop Management Under Authority of H. Res. 90, 62d Congress (1912), pp. 58 ff.

²² Replacing the contractors with company foremen actually resulted in higher costs. This was unimportant, however, since management was sure that costs would fall and made its plans on that basis. In this connection, a statement made later by the superintendent is most revealing: “I had expected that we would produce the goods cheaper under the non-contract but to my surprise I found that in practically every instance where we changed from the contract to the non-contract system the costs were increased. … However, in spite of the increased cost, which in most cases was not very great, we felt that the jobs were much better run under the non-contract system than under the contract system, because the Company had better control of the job.”

²³ A cost-accounting department was started in 1910 to formalize the effort.

²⁴ Between 1909 and 1915 employment jumped from 4,559 to 11,516, and net sales doubled.