The Washington herald., 1910-05-03
Opposition to Pending Resolution
Based Upon Court Decision.
HELD TO BE UNCONSTITUTIONAL

beg leave TO cite the case which went up
from this District involving a stock div
idend. declared by the Washington Gas
Light Company, the defendant practically
under suspicion of intent to commit a
like onense. IN the case at bar. The
court says in Gibbons VS.. Mahon. 13s U.
S, 569:
Therefore, when distribution OF
earnings is made hy a corporation among
its stockholders the question whether
such distribution e en apportionment Of
additional stock representing capital. or
a division Of proilts and income. depends
upon the substance and intent OF the ac-
tion OF the corporation, as manifested by
its vote OF resolution; and ordinarily a div
idend declared in stock or bonds IS 20 be
deemed capital, and a dividend in money
is to oe deemed income, OF each share.
"A stock dividend really takes nothing
from the property OF the corporation.
and adds nothing 70 the interests of the
shareholders. Its property is not dimIn-
ished and their interests are not In
creased. After such a dividend. as before.
the corporation has the title in all the
corporate property; the aggregate inter
ests therein Of all the shareholders are
represented by the whole number Of
shares; and the proportional interest Of
each shareholder remains the same. The
only change is in the evidence which
represents that interest. the new shares
and the original shares together repre-
sentilg the same proportional interest
that the original shares represented he
fore the issue Of the new ones" .
Now let US see II we cannot prove
conclusively-so conclusively that he
who runs may read" and the wayfaring
man. though fool. may not err therein:
that the reasoning in Williams VS. West
ern Union OF Judge Ruger and Mr. Jus
tice Gray in this case IS true. and con-
sequently the logic Of my learned ad-
versary. Mr.. Hazleton. and his disciples
as TO this matter is false. He said. in
his opening. that I inflated myself with
dreams-dreams Of riches almost beyond
the hope OF avarice-tEat we were 20
enjoy when we got that 100 per cent
dividend Let US see what actually hap
pened the next morning after we all
pulled ourselves by our bOOt-straps into
this Empyrean Of prosperity? Why-the
stock that was worth So the day before
the dividend was declared promptly
drOpped-MCGinty faShiOn-tO $50 the day
after the dividend came of So we lost
on the stock what we made on the divi-
dend. Verify, what fools we mortals
be" For the stock. plus the dividend.
was worth the day after it was declared
exactly what the stock alona was worth
the day before
Why, then, did we issue those certif-
Gates II their issuance added no value 10
what the property was previously worth
to what impartial appraisers said 1t was
wOrth-and to what Uncle Sans assessor
.ruthlessly assesses II for?
The answer ought to be plain enough
to those who have followed my argu-
ment We honestly wanted then. as now,
to escape from the false charge Of de-
claring 20 per cent dividends 1--WE have
10 do that to distribute 6 per cent per
annum upon the value Of our investmenD
when. in fact. at that nominal rate GO
per cent? we are only realizing legal
interest on our actually invested capital
Such a charge Is partisanship. pure and
simple-Parthian craftsmanship at that
shooting poisoned arrows IN retreat from
untenable ground. It does not rise to
the dignity Of casustry, but II does vim
dicate my criticism that the only pur-
pose that can be promoted by denying to
the Company here capitalization equal to
the actual value Of the property is to
rfFrn N-nrfciu1f1fTrrTa N SO Z
20 per cent true and 80 per cent false. A
thing that Is letter true and spirit false
cannot be either politically. economically
or morally profitable. The truth Is. this
kind OF hybrid falsehood IS at best de-
fensible only on the theory that good
| fruit may be produced from bad trees
by the unlimited use OF manure. But this
/ treatment having repeatedly failed,
submit 1t would be profitable now 70 fol-
low the Good Book-and cut these barren
trees down.
To make our position perfectly plain. !
solemnly protest that the actual truth IS,
as the proof shows, that the Washington
/ IGas-Light Company has not distributed on
capital account in any one year since
lSOFthe year Of the certificate dividend
total Of exceeding per cent upon the
actual value OF the property used In the
conduct Of its business. And has never
earned in any year since that year an
amount exceeding per cent upon the
actual cash value Of its present invest
ment. as determined by the Humphreys
appraisement or as may be determined
/ by capitalization Of the taxes paid by
| 1t to the collector of taxes at the rate
Of one dollar per hundred-a rate that IS
largely in excess OF the average rate
assessed upon private property in the
District of Columbia.
To prove our good faith In this defense
/ beg the Committee to consult corpora.
ton counsel or the Department Of JUS
tice to see II our contention here is not
recognized there as undenably true.
] To come back 10 the argument Now
honor bright! Mr.. Chairman-if you had
house and lot that cost you $1,000 forty
years ago. or say thirty years ago, and
its value had naturally increased to three
times its original cost, until II was now
actually worth at least 5000. according
to the market standards of value. until
the taxes. in fact. had been raised upon
1t from $50 to $5O-now. honestly-in such
case-if the government or the people
wanted that property, would you feel that
you were exacting an extortionate profit
II you priced it at its present actual
value7