Norwich bulletin., 1922-12-12
STOCK DIVIDEND NOT
 DEPRIVATION OF PR


 A ffty-dollar bill is a highly desira- ble possession. But dor everyday use, for the small change of life, five ten dollar bills are handler. If people who have been needleesly puzzled over what are loosely called stock dividends (which might be more usefully called stock rediStrfbutions), would get this simple faetr into their heads, they would realize exactly what a stock dividend Is. Wrongly assuming that dt is a dis trdbution of profits, and therefore taxa ble as income, number of writers have set up a charge of tax evasion where nothing of the kind exists.
 One editorial writer who has been allowed by his editor lapse into perhaps the worst of editorial vices, that of writing to bolster up the mistaken es- pousal of a bad case, has waxed indlg- nant over the long list of recently de. clared stock dividends. He sees in them nothing but distribution in Tlon-taxahle form of titles to property or money which fin a large part belongs to the United States treasury and would have gone there had not the corporation con- cerned been permitted to evade the law" He even goes on to say that the stock dividend Ifs not only proof df such acctmulations Gbeyond the
 
 measure of their extent"
 Few corporations have accumulated profits beyond the needs of their busi- | ness. In none does surplus, even when readjuSted to capital in stock dividends necessarily represent excessive aocumu. lation, to say nothing or being in any way a "measure' of such excess. A newspaper is corporation and It's edi. | tors should know that corporation sur. pluses are not kept in liquid form. They are represented, for the most part, or balance sheets by plants, inventories etc. Corporations with large paper surpluses 50 shown have often been un | able to pay even small cash dividends Earnings year after year have been ap piled to building up and extending bus | mess, and without such growth the cor porat1on dies.
 Such compulsory investment = | represented by 8 stock dividend, more over, benefits not the stockholder aloni -indeed he Is sometimes the loser increases the country's commerce an, provides employment for labor. An at tempt to tax surplus" as such woul, seriously disturb the whole economi IHe o6 the country. The taxing cf stocl dividends would be direct tax on cap ital, exactly the same h princspie . | the voters of Switzerland recently de feated seven to one.
 Somebody must make these saving and invest them in just thas way. ! British steel maker whose workmer dissatisfied with cut in wages neces sary to keep him in business aYains world competition. asked What abou the money you saved during the warl . replied If had not saved money the where would you all be now?"
 A stock dividend adds nothing to
 stockholders wealth. His share in tn business and it's profits remains exactl the same after he has received 1t as bc fore. By converting its surplus q count, or part oe t, into capital accoun a mere matter of bookkeeping, the col poration shuts oH the stockholder fro. ability to claim 1t in aistrlbusfon, . dor instance, the company were woun up. He iB conmandeered as an inyel tor. By aocepting the readtWtInent i, volved in a stock dividend he eonseni to q change in status from that q
 possible creditor to that ef an ifivolui
 tary but acQuiescent partner. There . no sense or pertlnence in the thesis th, 6 the public through taxes becomes u . involuntary partner. The stockhcid 5 l has, indeed, Become '1rozen'' into q
 corporation Wal Street Journal