The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1882-06-01

aud per cent stock.
Cash profit added to sinking fund 100000
SOrE.-ReDOrt for 1882 not made yet; not due until
november
lin 1874 the dividends paid by that
company were 3 per cent. in cash and
ger cent. in the stock. Remember that
was Immediately after the panic of
1873, when all business was in a great
state of depression, and the iron busi-
ness, in which | was concerned, was
A0sing money. 1t is in the testimony
before the Committee on Ways and
Means that the steel men reported that
aheir business was in a very unsatisfac-
tory, if not in a disastrous condition.
The testimony | hold in my hand, any
gentleman who desires to examine it
will find it is document styled Duty
on Steel Rails" printed in 1880 by the
Committee of Ways and Means, and en-
OTacing testimony taken before that
committee.
In 1874 the dividends paid by the
pennsylvania Steel Company were 8
per cent. In 1875 they were per cent.
cash, 8 per cent. cash and 3 per cent.
stock, making 9 per cent. in all. In
1876 they were 3 per cent. in cash and 3
per cent cash, making per cent in ALL
In 1877 they were per cent. cash. In
1873 they were 30 per cent. cash, show
ing that at that date the reserved profits
were nearly exhausted. In 1879 they
were per cent, and, as it is termed,
~ cash profits added to the sinking fund .
10000, which on a capital of about two
millions of dollars, was IL per cent
more. In 1880 the dividends were II
per cent, two of per cent. each. In
1881 the quarterly dividends were ) per
cent, 3 per cent, per cent, 6 per cent,
making % per cent in all, cash diyi-
dends.
Vow, having made that dividend in
1881 NUhof hn - a.
company? The evidence will be print
ed in full in the Record, and will read
it before l get through If any one shall
dispute my statements. The company
iFound itself with the sum of s., ,286, ,423.-
'5l ON hand on the 31st of August. 1881;
its capital being 100000. The COM
pany had gone through an era of very
bad times, in which it had made regu-
Lar dividends, and presumably divided
all its profits. As a matter Of fact, l
15hink that the surplus in 1878, when
the dividends fell to 315 per cent. before
the boom" came, was very small
After making its dividend of per cent.
in 1879, when it carried cash profit to
the sinking fund of $4,000, and pre-
sumo exhausting the reserve fund, and
safter making dividend of ~ per cent.
IN 1880 and % per cent. in 1881, it found
itself with the sum of, 1926, 1881 un-
divided profits on hand.
Gentlemen will please to pause a mo-
gnent and think how much B., ,286, ,423.51
is on capital of $2,000,000; profit ac-
quired in a single year. or at most in
GwO years. Now, when they paid p per
cent. dividend in 1881 they had paid all
the dividends that they wanted to pay a
state tax on. My friend from Pennsyl-
Syania (Mr. Curtin) will tell you that the
state of Pennsylvania imposes tax on
dividends, and the bigger the dividends
<Ot course the more the tax. ..
Now, this company having more than
100000 surplus, dfi not care to paw
taxes on more than % per cent. dfyi-
dends. So they devised a plan to dis
tribute this surplus in some other form
than in the nominal shape of a dividend;
sRnd 1 will tell you how they sought to
accomplish this difficult feat.
There we're 10000 shares of this stock
5000 belonging to the Pennsylvania
Railroad Company. They proceeded TO
purchase from the Pennsylvania Rail-
road Company 5000 shares Of this stock
and paid for it $265 a share. Now, if
you will take the trouble to add the
capital of the company 100000 to the
surplus $3,286, ,423,5 making together
Just the amount of the capital plus the
SURPLUS, and divide that by 1000 shares,