STOCK DIVIDENDS 
THE NATURE OF THE INQUIRY 
The present investigation into the subject of stock dividends was 
made pursuant to a resolution of the Senate of the United States 
(S. a, 304) approved December 22, 1926. This resolution reads 
as follows: 
Whereas it has become the usual practice of corporations in order to protect 
stockholders from the payment of income taxes, to declare stock dividends; 
WA ris this procedure enables corporations to acquire competing plants, 
and in this way avoid the provisions of the antitrust laws; and 
Whereas in order to legislate upon the subject, the Senate should be fully 
informed as to the extent of this practice: Therefore be it 
Resolved, That the Federal Trade Commission be, and it is hereby, directed 
to ascertain and report to the Senate the names and the capitalization of cor- 
porations that have issued stock dividends, together with the amount of such 
stock dividends, since the decision of the Supreme Court holding that stock 
dividends were not taxable, and to ascertain and report the same information 
as to the same corporations for the same period of time prior to such decision. 
The decision of the Supreme Court of the United States (Eisner v. 
Macomber, 252 U. S. 189), Appendix I, referred to in the resolution 
was rendered on March 8, 1920. Because of the closeness of this 
date to the beginning of the calendar year it was decided to request 
the necessary information for the seven years ending and beginning 
January 1, 1920. By this method each of the two 7-year periods 
would begin approximately two months earlier than if March 8 
were used. This would affect the results but slightly and would 
simplify the making of the returns. As a large proportion of cor- 
porations keep their books on a calendar-year basis it was believed 
that this procedure by sparing them some labor and expense would 
result in securing a larger number of reports to the commission. 
For the four years 1922-1925: the corporation income-tax returns 
of the Treasury Department have asked for reports as to the issue 
of stock dividends. On the request of the commission this depart- 
ment kindly agreed to compile and furnish a list of all corporations 
reporting the issue of such dividends in the four years in question. 
The commission itself compiled from Poor’s and Moodys Manuals 
the Commercial and Financial Chronicle, and the Cumulative 
Digest for each of the years 1920 to 1926, inclusive, the names of all 
corporations which issued, or apparently issued, a stock dividend. 
Combining the corporations on this latter list with those on the 
Treasury list and eliminating all duplications gave a total of cor- 
porations either reported to have issued stock dividends or about 
which there was information leading to the conclusion that they 
might have issued such dividends between January 1, 1920, and 
December 31, 1926.