Die deutsche Kaliindustrie

Bibliographic data

Monograph

Identifikator:: 1821348664

URN:: urn:nbn:de:zbw-retromon-217403

Document type:: Monograph

Title:: Die deutsche Kaliindustrie

Place of publication:: Berlin

Publisher:: E. S. Mittler & Sohn

Year of publication:: 1929

Scope:: XII, 175 Seiten; Tab

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

STOCK DIVIDENDS 17 led to a policy of extremely liberal dividends to stockholders, as compared with 1913-1919. This is indicated by the fact that out of the total surplus available for distribution from 1913 to 1919 for 2,971 corporations paying stock dividends, only about 43 per cent was actually distributed either in cash, stock, or other dividends, while from 1920 to 1926 the dividend distribution aggregated about 62 per cent. While there was a large increase in cash dividends from 1920 to 1926 as compared with the preceding seven years for corpor- ations paying stock dividends, it amounted to less than 100 per cent as compared with an increase of nearly 500 per cent in stock divi- dends. (Table 5.) The reasons are not difficult to understand. Prior to the stock dividend decision the profits taxes and war-time requirements for capital rendered large reinvestments in property desirable as has been stated, while the large surtaxes combined with uncertainty as to whether stock distributions were taxable to share- holders, tended to prevent the capitalization of the surplus represent- ing this reinvestment. While the return to a peace-time basis and the abolition of the excess-profits taxes removed the two earlier incen- tives to a large invested capital, the enormous development and expansion of industry since that date has furnished an almost equally powerful motive for continued reinvestment in the property and business. Although a considerably lower proportion of the total surplus attributable to the later period was reinvested in the property at the end of 1926 than of the surplus attributable to the earlier period at the end of 1919, the total amount of the reinvestment in the case of 2,971 corporations paying stock dividends in the later period was larger;about 2.7 billions as compared with about 2.2 billions. There was, therefore, an enormous reinvestment in the later as well as in the earlier period much of which could not in consequence be distribu- ted in cash or other assets. With the decision in Eisner ». Macomber that stock dividends were not taxable as income to stockholders any inhibitions against such dividends resulting from their possible effect in increasing the sur- taxes of large shareholders were removed. High surtaxes on large individual incomes though successively reduced from war levels and eliminated so far as the smaller incomes were concerned, were still in effect, however. To the extent that the corporation distributed dividends in stock rather than in cash the business expansion of 1920-1926 could be financed and the stockholders could at the same time be given some tangible evidence of their increasing equity without the larger shareholders becoming taxable thereon. The net result was a much greater increase in stock than in cash dividends. One or two further points with reference to the stock dividends of 1920-1926 may be noted. The first is that despite the large earnings of the last seven years, the net increase in accumulated surplus for 2,971 corporations paying stock dividends was only some three hundred odd millions during this period. In other words these corporations distributed the equivalent of all but a small proportion of their huge surplus obtained from earnings and adjustments from 1920 to 1926. The size of these distributions combined with the fact that so large a proportion of them was in stock caused a pronounced reduction in surplus per dollar of capitalization. As of the date of closing nearest January 1, 1920, the stock capitalization of these corporations

Access restriction

Copyright

fullscreen: Stock dividends

Monograph

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation