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STOCK DIVIDENDS 
33 
may be illustrated by the action in this respect (as reported in Moodys 
al, 1918 Industrial, and the Commercial and Financial Chronicle), of some 
Standard Oil Companies, since the disintegration pursuant to the decision 
court in 1911. (Standard Oil Co. ». United States, 221 U. S. 1.) 
Standard Oil Co. (of Indiana), an Indiana corporation. It had on Decem- 
il, 1911, $1,000,000 capital stock (all common), and a large surplus. On 
1115, 1912, it increased its capital stock to $30,000,000, and paid a simple 
dividend of 2,900 per cent in stock.? 
Standard Oil Co. (of Nebraska), a Nebraska corporation. It had on 
ber 81, 1911, $600,000 capital stock (all common), and a substantial 
: On April 15, 1912, it paid a simple stock dividend of 3314 per cent, 
ing the outstanding capital to $800,000. During the calendar year 1912 
' cash dividends aggregating 20 per cent; but it earned considerably more, 
i at the close of the year again a substantial surplus. On June 20, 1913, 
red a further stock dividend of 25 per cent. thus increasing the capital to 
000.2 
fhe Standard Oil Co. (of Kentucky), a Kentucky corporation. It had on 
ber 31, 1913, $1,000,000 capital stock (all common), and $3,701,710 
g Of this surplus $902,457 had been earned during the calendar year 
the net profits of that year having been $1,002,457 and the dividends paid 
100,000 (10 per cent). On December 22, 1913, a cash dividend of $200 
re was declared payable on February 14, 1914, to stockholders of record 
vy 81, 1914; and these stockholders were offered the right to subscribe for 
al amount of new stock at par and to apply the cash dividend in payment 
or. The outstanding stock was thus increased to $3,000,000. During 
endar years 1914, 1915, and 1916, quarterly dividends were paid on this 
t an annual rate of between 15 per cent and 20 per cent, but the company’s 
increased by $2,347,614, so that on December 31, 1916, it had a large 
over its $3,000,000 capital stock. On December 15, 1916. the company 
a circular to the stockholders, saying: 
e company’s business for this year has shown a very good increase in 
and a proportionate increase in profits, and it is estimated that by January 
7, the company will have a surplus of over $4,000,000. The board feels 
id in stating that if the proposition to increase the capital stock is acted 
lorably, it will be proper in the near future to declare a cash dividend of 
Tr cent; and to allow the stockholders the privilege pro rata according to 
loldings, to purchase the new stock at par, the plan being to allow the 
olders, if they desire, to use their cash dividend to pay for the new stock.” 
lincrease of stock was voted. The company then paid a cash dividend of 
r cent, payable May 1, 1917, again offering to such stockholders the right 
cribe for an equal amount of new stock at par and to apply the cash 
hd in payment therefor. 
dys Manual, describing the transaction with exactness, says first that the 
was increased from $3,000,000 to $6,000,000, “a cash dividend of 100 per 
ig May 1, 1917, being exchanged for one share of new stock, the 
lent of a 100 per cent stock dividend.” But later in the report giving as, 
tary in the Manual, the dividend record of the company, the Manual 
‘A stock-dividend of 200 per cent was paid February 14, 1914, and one 
per cent on May 1, 1917.” And in reporting specifically the income ac- 
of the company for a series of years ending December 31, covering net 
, dividends paid, and surplus for the year, it gives, as the aggregate of 
hds for the year 1917, $660,000 (which was the aggregate paid on the 
ly cash dividend—S5 per cent, January and April; 6 per cent, July and 
i and adds in a note: “In addition a stock dividend of 100 per cent was 
uring the year.” + The Wall Street Journal of May 2, 1917, page 2, 
| > 1917 “High” price for Standard Oil of Kentucky as “375 ex stock 
fi Ra 
hus appears that among financiers and investors the distribution of the 
by whichever method effected is called a stock dividend; that the two 
fis by which accumulated profits are legally retained for corporate pur- 
ind at the same time distributed as dividends are recognized by them to 
{ys, p. 1544; Commercial and Financial Chronicle, vol. 94, p. 831; vol. 98, pp. 1005, 1076. 
ys. p- 1548; Commercial and Financial Chronicle, vol. 94, p. 771; vol. 96, p. 1428; vol. 97, p. 1434; 
‘ys, D. 1547; Commercial and Financial Chronicle, vol. 97, pp. 1589, 1827, 1903; vol. 98, pp. 76, 
103, p. 2348. Poor's Manual of Industrials (1918), p. 2240 in giving the & Comparative income 
' of the company describes the 1914 dividend as “Stock dividend paid (200 per cent)—$2,000,000’; 
ribes the 1917 dividend as *‘$3.000.000 special cash dividend.” 
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