Unfortunately, what is "fair" to you or him is largely irrelevant in the legal analysis. You may want to buy out his interest in the partnership and go your separate ways. If I can be of any assistance, please do not hesitate to contact my office.
telling you what you should have done is a waste of our time.
You two need to negotiate the terms of any continued business relationship.
You tell us nothing about any existing agreement, and the legal nature of the partnership.
All business relationships suffer through difficult times especially when the economy is in a slump. Based on what you wrote, it seems that you and your partner have very different ideas about how the company should be run. However, that does not necessarily mean that a partnership is no longer the best business entity for your operation.
You and your partner should each take some time and write up a brief summary of how you see the business now, where you want the business to be in a five years, and the steps you think the business needs to take to get there. When you compare the two answers, I'm sure you will see many differences.
Then, you should work with an attorney who specializes in working with very small businesses so that you can get the business, and yourselves back on track. Don't hesitate, this kind of friction between partners can be the death of a company faster than you think.