Evening star. [volume] (Washington, D.C.) 1854-1972, 1934-12-02
CORPORATIONS PAY
ABOUT S43,ODO,OD)
MORE |ND|V|DENDS
Fear of Heavy Surplus Tax
Seen in Large Novem-
Der Gain.
EARNINGS ALSO HIGHER
FOR FIRST 9 MONTHS
Some Firms Favor Spending for
Plant Modernization Rather
Than Payments.
BY RAIDER WINGET,
SSnCiatad Financial

NEW YORK, December 1.-Divi-
dends, like the stars in Alabama, fell
on Wall Street this month, and finan-
cial analysts are seeking the cause,
while grateful stockholders cash their
checks.
During November rs corporations
passed out nearly S43OOO,OOO in divi-
dends over and above the rates pre-
viously prevailing. More than s34,-
100000 of this went out through the
extra dividend route.
At the same time there were many
corporations which resumed dividend
payments. announced stock dividends
and paid something on account Of
dividends previously deferred.
One cause widely assigned for these
payments is the fear that the Fed
eral Government will invoke its heavy
surplus tax enacted to penalize cor
porations which permitted accumula-
ton of large gains or profits to enable
shareholders to escape the imposition
Of surtaxes.
There is a comfortable feeling in
some Wall Street sections, however
that the surtax was aimed at those
vest pocket corporations formed to
hold the profits of an individual who
wished to evade surtaxes. Those types
OF corporations-John Jones, Inc
consisted of John Jones, Mrs. Jones.
Miss Jones and John Jones. jr, and
the corporations surplus was COM
posed Of John Jones profits which he
made and did not wish to pay taxes
on.
Point to Other Phases.
On the other hand. another Wall
Street element points to the law and
says thereafter it is prima-facie evil
dence that the holding of unreason-
able gains or profits undistributed is
for the purpose of enabling stockhold-
ers to escape surtax."
When the feeling spreads, surplus
earnings are disposed of by corpo-
rations. The Treasury, knowing the
administration wants the money
spent, sits back and says nothing.
One element in the financial dis
trict here may believe the Treasury
doesn't mean them particularly, but
they fear the coming Congress may
enact additional legislation to tax
their accumulated wealth. They
would rather spend it themselves.
And then, too. there are those who
are thoroughly convinced that now is
the time to spend while prices are
lower than they may be within the
next IL months.
Some corporations see wisdom In
spending for machinery, plant reno
walton and general improvements
rather than disbursing their surplus
to stockholders.
The Federal Government all along
has been urging such expenditures to
create unemployment, executives of
these companies declare, and the or
carnations are willing to abide by
the wishes of Washington.
Another cause for added payments
is the simple fact that earnings for
the first nine months of this year
generally have been well above last
year. Many companies in the third
quarter showed earnings below the
same period of 1888, but in view of
the low net during the first six
months OF 1888, this year is expected
to show total increases.
j. l.. Amberg, economist for Harri-
man & Co., has compiled list of COM
panies showing the status of their
surplus.
Allied Chemical Cited.
Standing high in the table of COM
panies without bonds, having large
earned SURPRISES and large cash and
security holdings, is Allied Chemical,
with an earned surplus of ST. a COM
mon share, cash and marketable Sc
curities per common share of s36.
National Lead stands at $50 and
SIS in the two clasifications, George
W. Helme (snuff company s25 and
S46, before ordering extras Just this
week of $6.75 a share.
Similar companies, but with mod
crate cash and security holdings show
American Can with an earned surplus
per common share of $29 and cash and
marketable securities per common
share of So; Coco Cola with s28 and
81 in the two classes, General Asphalt
with $40 and Sc. International Bust
ness Machines with $50 and 81.
Among the companies with
stable funded debt, having large
earned surpluses and large cash and
security holdings, are Aluminium Co.
of America with an earned surplus per
common share of $40 and cash and
marketable securities per common
share Of SIT, Gulf Oil of Pennsyl-
vania $3S and IS, Liggett & Myers
(tobacco) $l2 and $40 and United
Fruit at $50 and $13.