The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-12-19
Trends
Million aires Get
Bulk Of Income
From Stocks.
; BY VINCENT s. LYONS :
Times financial Editor

THE twenty persons in 1882 with
4 incomes in excess OF 81
million received 90 per cent Of their
revenue from dividends. only 5 per
cent from interest and IL per cent
from wages and salaries. These
facts are disclosed by an analysis
Of 1882 income tax returns filed
with TIE Bureau Of Internal
Revenue.
Therefore, IL may be assumed
that the exclusive fraternity look
upon the stock market with certain
favor. II should be remembered
that the collapse Of security values
was inaugurated in October. 1929,
and proceeded without any ma
terial interruption for the next few
years. BY 1882. II was quite gen.
orally realized that the defiation in
stock values was not a temporary
development.
Despite this, the official figures
of the Government department re-
veal that the stock market pro-
vided 90 cents of every dollar
heaped into the laps of the million
aire. All Of this SO cents actually
represented dividend returns.
Numerous interpretations can be
made Of this development. We
shall limit ourselves to only few.
TN the first place consideration
Il should be given TO the initiation
angle. Then. as now. there was
widespread fear Of unorthodox
money policies. The examples of
European nations with tinkering
Of the money system were presented
and the generally accepted view
was that equities represented the
best hedge against initiation. Con-
sequently it is quite possible that
some shifting Of funds from the
bond to stock market might have
ensued for this one reason.
Another view that might have
been taken is that money shrewdly
invested in stocks can yield hand
some return. The somewhat dis
courteous contention also might be
made that some corporations main
tanned dividends when those dis
bursements we're not earned be-
cause executives of the company
owned large blocks of the stock.
However, this is not entirely true
as is demonstrated by the Amer
lean Telephone and Telegraph Co.,
which has kept the SO rate on its
shares throughout the depression
although it has not been earned
in recent years. Continued pay
ments are warranted. the company
says, by the large surplus which
has been accumulated.
The great discrepancy between
dividend and interest income of the
millionaires is truly amazing. Un-
doubtedly. the very fact that the
really high grade bond obligations
at that time we're selling at very
low yield basis accounted for the
shifting of funds from the bond
to the stock market.
TINE showing becomes more
Il startling when it is realized
that 1892 represented the hnttom
Of the depression for American
corporations, on the basis of cor
poration tax returns. During 1882
only 82,646 of the ASH 1884 reporting
corporations showed a profit of any
kind. Thus, only one company out
of approximately every five and
half was able to stay in the black
during that year.
In 1888, the number of corpora
lions which were able to avoid the
use of red in compiling their annual
income accounts was l04.702 out OF
472,174 reporting units The cur
rent year has even witnessed an
improvement over the preceding
year. According to the National
City Bank of New York TAP per
cent of corporations subjected to
analysis reported increased profits
over the corresponding period last
year.
The important part that corpora
tons play in distributing wealth
is indicated by figures showing
that in 1892 all domestic units paid
out S6.151 ,082. 1872 in cash dividends
and S163 1904 in stock dividends.
However, in order to make these
payments the corporations went
into the red to the extent of ST.
624. 046 900. In 1884 all companies
listed on the New York Stock Ex-
change. the United Press reports in
a copyrighted story. paid out to
their holders S1,503, 971, 524 in div
idends. an expansion of almost
5000 COO, 900 over 1893.