The putting-out system was a means of subcontracting work. It was also known as the workshop system. In putting-out, work was contracted by a central agent to subcontractors who completed the work in their own facilities, usually their own homes.
It was used in the English textile industry, in small farms, and lock-making trades as late as the 19th century. Historian David A. Hounshell writes,
In 1854, the British obtained their military small arms through a system of contracting with private manufacturers located principally in the Birmingham and London areas ... Although significant variation occurred, almost all of the contractors manufactured parts or fitted them through a highly decentralized, putting-out process using small workshops and highly skilled labor. In small arms making as in lock production, the "workshop system" rather than the "factory system" was the rule.[1]
All of the processes were carried out under different cottage roofs. It was replaced by inside contracting and the factory system.
The domestic system was a popular system of cloth production in Europe. It was also used in various other industries, including the manufacture of wrought iron ironware such as pins, pots, and pans for ironmongers.
It existed as early as the 15th century but was most prominent in the 17th and 18th centuries. It served as a way for entrepreneurs to bypass the guild system, which was thought to be cumbersome and inflexible. Workers would work from home, manufacturing individual articles from raw materials, then bring them to a central place of business, such as a marketplace or a larger town, to be assembled and sold. The raw materials were often provided by the merchant, who received the finished product, hence the synonymous term putting-out system. The advantages of this system were that workers involved could work at their own speed while at home or their home and children working in the system were better treated than they would have been in the factory system, although the homes were polluted by the toxins from the raw materials. As the woman of a family usually worked at home, someone was often there to look after any children. The domestic system is often cited as one of the causes of the rise of the nuclear family in Europe as the large amount of profits gained by common people made them less dependent on their extended family. These considerable sums of money also led to a much wealthier peasantry with more furniture, higher quality food, and better clothing than they had had before. It was mostly centralized in Western Europe and did not take a strong hold in Eastern Europe.
Of course, the acquisition of profit largely depended on which part of the putting-out system one was associated with. If one was a worker in the London textiles industry, for example, the cost of hiring sewing equipment and purchasing thread often precluded the worker from eating on a regular basis. Likewise the fourteen hour days lead to many untimely deaths.
The development of this trend is often considered to be a form of proto-industrialization and remained prominent until the Industrial Revolution of the 19th century.
At that point, it underwent name and geographical changes. However, bar some technological advancements, the putting-out system has not changed in essential practice. Contemporary examples can be found in China, India and South America, and are not limited to the textiles industry.
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A cottage industry is an industry—primarily manufacturing—which includes many producers, working from their homes, typically part time. The term originally referred to home workers who were engaged in a task such as sewing, lace-making or household manufacturing. Some industries which are usually operated from large centralized factories were cottage industries before the Industrial Revolution. Business operators would travel around, buying raw materials, delivering them to people who would work on them, and then collecting the finished goods to sell, or typically to ship to another market. One of the factors which allowed the Industrial Revolution to take place in Western Europe was the presence of these business people who had the ability to expand the scale of their operations. Cottage industries were very common in the time when a large proportion of the population was engaged in agriculture, because the farmers (and their families) often had both the time and the desire to earn additional income during the part of the year (winter) when there was little farming work to do.
The use of the term has expanded, and is used to refer to any event which allows a large number of people to work part time. For example, eBay is said to have spawned a cottage industry of people who buy surplus merchandise, and sell it on their auction system.
A cottage is a farmhouse usually in rural areas. A cottage industry is a small self-help industry that is carried out in the home, community centre, parish hall or some other convenient place. Such industries are evident in handicrafts, catering, tailoring, dressmaking, beauty culture, retailing of dry goods, pottery and furniture making on a small scale.
Cottage industries developed mainly out of the need for an additional source of income, because of the need to use one's spare time gainfully and because of the relative ease of acquiring the necessary raw materials to set up such industries.