• U.S.

Business: Surplus Sock

2 minute read
TIME

Christmas was still a month off but many a potent corporation last week began opening its surplus sock and doling out extra dividends. A round dozen announced extras and specials amounting to nearly $10,000,000, bringing November’s total dividend declarations to $347,000,000, highest since February 1932.

Tobacco shares made the most news when P. Lorillard Co. declared a $1 extra, the first since 1917, and George W. Helme Co., famed snuff makers, announced a $4.75 extra special, a $2 customary special, and a regular quarterly of $1.25. Directors of American Can took Wall Street and some of the company’s own officers by surprise with a $1 extra besides the regular $1 quarterly. A small chemical company named Vulcan Detinning, which in 32 years of corporate existence has omitted common dividends for 28, made enough out of reducing scrap tinplate to pay a $4 special. Ruberoid Co., which has not missed a dividend since 1889. announced a 25¢ regular, a 25¢ extra. Ingersoll-Rand, makers of compressors and pneumatic tools, had $2 a share extra for stockholders. So did Draper Corp. of Hopedale, Mass., manufacturers of automatic weaving machinery. Hercules Powder’s extra was 75¢, Scott Paper’s 25¢. Sunshine Mining Co., with 14 Idaho lead and silver mine claims known as the Yankee Boy and Yankee Girl groups, had 4¢ extra to add to a 16¢ dividend.

Back of most of these extras was more than a burst of Christmas cheer. It was acute corporate fear of the tax collector. Under the Revenue Act the Federal Government may lay a penalty up to 35% on the net income of a corporation which accumulates surpluses in excess of what the Government believes it “reasonably” needs. Month ago the Treasury Department launched a drive to collect such penalties from some 100 U. S. corporations (TIME, Oct. 29). The Treasury Department found itself in a morass of legal tangles arising from the difficulty of deciding what needs are ”reasonable.” It was clear from last week’s outpouring of extra dividends that many a corporation had decided to split swollen surpluses with its stockholders before Congress meets in January to tighten the revenue law’s definitions.

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