The Bennington evening banner. (Bennington, Vt.) 19??-1961, 1920-03-10
The United States Supreme ! Courts
Protection of Property.

What the Supreme Court has de-
cided in holding that 1t is unconstitu-
tional TO tax stock dividends is sim
ply that If a man owns dollar bill
and splitsN ii into two silver half dol
lars or into four quarters or into ten
dimes, or divides it as many times as
you please, he has not a penny more
and not penny less than when it
was in the single dollar bill
Stock promoters and gamblers have
made the mistake themselves or have
led gullible investors into the mistake
lof thinking you could multiply the
value OF property by multiplying
the certificates of stock covering that
property. But no clear brain. whether
on the Supreme Court or anywhere
else, ever made such a mistake of
reason and OF fact. You might as
well say that you could increase the
value of a property by changing the
color of the ink in which the stock
certificates were printed. The late
James j. Hill. in fact, said after the
Northern Securities decision that it
couldn't make any difference to the
stockholders, as to what they really
owned whether the Supreme Court
told them they must have five yellow
tickets worth two green tickets or
two green tickets worth one red
ticket representing exactly one and
the same thing.
II stakeholder with one share of
stock in company holds one-thou
sandth part of all the plant, equip
ment, cash, good viii and other as
sets of that company he will own ex-
actly the same proportion, and there
fore exactly the same value, of that
property whether his and everybody
else's shares are multiplied by two or
are divided by two-ft doesn't make
a particle of difference which.
For years the sound industrial
commercial and financial institutions
of the country have pursued the wise
and the necessary policy OF ploughIng
in part of their earnings instead of
handing them all out as dividends
or as profit payments, These ploughed
in earnings have made bigger, better
and more modern buildings, machin-
cry and general equipment A rail-
road like the Pennsylvania has put
perhaps a quarter of a billion of dol !
lars of such new capital on top OF
the old capital in its stock issues. !
We speak of it as new capital because !
it is just as much new capital as II |
Il had been subscribed out OF the !
stockholders pockets II never
reached the stockholders, but il was
always their money. and when ii |
went into the property of the stock |
holders instead of into, the pockets
of the stockholders it couldn't he any !
thing else but capital owned by the |
stockholders A great industry like |
the United States Steel Corporation |
similarly has ploughed in hundreds /
of millions of dollars for the stock. |
holders to own.
The United States Congress with its |
statutes and the Treasury Depart /
ment with its rulings should be able !
TO take care of the cases where cor I
porations and taxpayers seek to avoid /
paying lawful taxes by means of
stock dividends. But as we have fire.
quently said since this question came !
up, the plain English is that the /
Treasury Department and Internal /
Revenue collectors have presumed to
do with the income tax laws and with
the very Constitution of the United
States things that Congress never
dreamed of doing. The Supreme
Court has simply put such self-con-
stituted superauthorities back where
they belong while confirming to the |
American people the rights which
Will always be theirs so long as this /
is country with government of
laws, not men-New York Sun