The Washington times., 1910-05-03

debtedness. because they have no power
under the charter to do so.
Now, what is a legal dividendY A divi-
dend is a fund set apart out Of the net
profits Of the corporate business TO be
divided among the stockholders in pro-
that defines a dividend See $50 L. 5,
page 456.
The dividend must come from the net
profits, out OF the earnings GU can
not withhold the net prOfts and then
isue a dividend certificate Of indebted
ness under any law
Is not that Tue2
You cannot apply your earnings, your
net earnings, or otherwise book assets
in your plant OF IN your property, ana
then supply that Win certlncates OF IN
teresf- bearing Indebtedness. and give
that TO the stock holders as a bonus 10
take the place OF what would be te-
climate dividend issue That, no doubt
I is the law
The &. $4,000 OF certificates OF fndebt-
/ edness are those that are now pending
I and have not been paid. Those diVldehd
/ certificates Of Indebtedness were issued
{ in the same year that a cash DIVIDEND
was paid OF 10 per cent. and that dIVl-
( deud was issued in addition 10 the cash
] What Issue Was.
, It was issued 10 the exact amount
Of their capital stock. S2.600.010 Of inter
/ est
/ It accumulates $4,000 each year IN in
/ terest. In ten years half the time OF
the life Of those certificates, you viii
/ End a million dollars and more Of in
: terest. accumulated interest. II you add
your principal 10 this today you see the
amount OF accumulation Of Indebtedness
/ that must stand all the time against
! the revenues or income Of the com
pany-
| - - .s--- -. s----,~ chose one zyear
i they. can Issue them the next year, and
they can keep on issuing them, and Of
! course IL is as apparent as can oe
/ that in the end the price Of gas has
/ got to go Up in order 70 meet those m
/ creasinE obligations. unnatural ODllE1-
/ tons, or else that company has got %
20 into insolvency or dlssOiuIloIi- 1ltd'
IS the system that this present reSoi u
ton is pointed at That is the very oD-
! jectiona5le condition Of the conduct OF
matters in this Gas Company That mas
/ given rise. as I understand it-that Is
one OF the thinEs-to the necessity OF
further supervision in the form or this
/ Mr. Pearre-Do YOU think II is worth
our " lille 70 hear YOU review the MS
/ tory Of the company. Don't you Jhlnh
I II would he best 20 Erl3t your argument
TO q reply TO that Of Ar- EOldSbCrOugn
i / do not wish 10 indicate to you the or
der Of your argument, or your arrange
ment, but I just throw out that suEseS-
don
Mr. HazelJan-T VIII take up the mat
ter OF the certificates or Indebtedness 81
stock. because that. as I understand IT,
IS one Of the main reasons why this
I resolution Is introduced here II Is &c
I end that system OF dividend certificate
l Of indebt edneSs being used and distr1b-
uted as bonus among the stockholders
! Now the first 500 0o0. Of course, was ap-
/ piled IN that way. and that was con
l verted into stock under the law OF 1856
That has passed BIZ
ComPany's Position
Our position is that this gas com.
pany has no right 20 declare and ISSUE
the kind OF dividends that II is giving
10 its stockholders. aside from cast
dividends, that they are not authorized
BY law. that they are unknown 70 thei
/ charter. that they are unknown 70 an,
i act Of Congress That IS our position
! While the corporation persists IN 81
doing this resolution comes along and
/ gently reminds them that Congress 4.
the master Of the situation and propose.
TO supervise and regulate them 70 TIT
extent Of stopping that kim OF a sys
TEN OF dIvide1eds
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