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The putting-out system is a means of subcontracting work. Historically it was also known as the workshop system and the domestic system. In putting-out, work is contracted by a central agent to subcontractors who complete the work in off-site facilities, either in their own homes or in workshops with multiple craftsmen.
It was used in the English and American textile industries, in shoe making, lock-making trades and making parts for small firearms from the Industrial Revolution until the mid-19th century; however, after the invention of the sewing machine in 1846, the system lingered on for the making of ready made men's clothing.
The domestic system was suited to pre-urban times because workers did not have to travel from home to work which was quite impracticable due to the state of roads and footpaths and members of the household spent many hours in farm or household tasks. Early factory owners sometimes had to build dormitories to house workers, especially girls and women. Putting-out workers had some flexibility to balance farm and household chores with the putting-out work, this being especially important in winter.
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.
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.
European cloth and other trades 
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, 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,[when?] 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 led to many untimely deaths.
Thomas Hood's poem The Song of the Shirt (1843) describes the wretched life of a woman in Lambeth labouring under such a system. It was written in honour of a Mrs. Biddell, a Lambeth widow and seamstress living in wretched conditions. In what was, at that time, common practice, Mrs. Biddell sewed trousers and shirts in her home using materials given to her by her employer for which she was forced to give a £2 deposit. In a desperate attempt to feed her starving infants, Mrs. Biddell pawned the clothing she had made, thus accruing a debt she could not pay. Mrs. Biddell, whose first name has not been recorded, was sent to a workhouse, and her ultimate fate is unknown; however, her story became a catalyst for those who actively opposed the wretched conditions of England’s working poor, who often spent seven days a week labouring under inhuman conditions, barely managing to survive and with no prospect for relief.
Anders Jonsson (1816-1890), was a famous Swedish entrepreneur who continued a putting-out business at Holsljunga. He contracted up to 200 domestic workers, who came to his house to get the raw material and returned after a couple of weeks with textiles, that local pedlars from the city of Borås then bought and went out to sell among other things around Sweden and Norway.
Cottage industry 
|Look up cottage industry in Wiktionary, the free dictionary.|
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[where?] to have spawned a cottage industry of people who buy surplus merchandise, and sell it on their auction system. Another example of a cottage industry is the "ecosystem of devoted news sites" dedicated to the prediction of products that Apple Inc. will roll out next.
See also 
- Taylor, George Rogers (1989) . The Transportation Revolution, 1815-1860. New York: Rinehart & Co. (reissued: Sharpe). ISBN 978-0-87332-101-3.
- Hounshell 1984, p. 17.
- Hounshell, David A. (1984), From the American System to Mass Production, 1800-1932: The Development of Manufacturing Technology in the United States, Baltimore, Maryland: Johns Hopkins University Press, ISBN 978-0-8018-2975-8, LCCN 83016269
- Williamson, Oliver E. (1985), The Economic Institutions of Capitalism, New York: The Free Press, ISBN 978-0-684-86374-0