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590 THE ADMINISTRATION OF INCOME [Bk. Ill
ingly loyal to the company, the policy to be followed is somewhat
different from that so far suggested. In this case small
dividends should be begun sooner, in order to strengthen the
investment position of the stock, but especial care must be
taken that a rate be not established which cannot be maintained.
On the other hand, when the common stock is held entirely by
the management there is no need of exerting a special effort to
preserve its investment character, except that a dividend once
begun should be maintained in order to preserve and strengthen
the general credit position of the company.
Action of the Union Pacific Directors In closing this
discussion no more comprehensive summary of sound dividend
policy can be found in the whole annals of American financial
history than a certain resolution of the Board of Directors of
the Union Pacific Railroad. An entirely new and very able
management acquired control of the road at the time of its
reorganization in 1897. During the succeeding two years large
sums of money were expended in betterments. Control of
connecting roads was acquired at low prices and through able
management enormous equities were built up for the benefit of
the Union Pacific Railroad. And the gross and the net earnings
had increased by leaps and bounds so that the general
credit of the road was becoming firmly established, notwithstanding
its previous unfortunate history. Yet the directors,
on the crest of this initial prosperity, refused to pay the full
dividend on the preferred stock and passed a resolution which
began as follows: "Whereas the company has been in possession
of all its main lines barely a year, and of its branch lines a
less time, and is therefore without a basis of experience for
determining any fair average of results for unequal years, and
it is not deemed advisable to add to the bonded debt, but to
continue a liberal application of surplus income to permanent
improvements and additions and to such uses as will secure
economy of operation and increased earning power, and thereby
establish stable and permanent values for its securities and a
Beschrijving voorwerp
| Titel | The financial policy of corporations |
| Auteur | Dewing, Arthur Stone |
| Jaartal | 1926 |
| Collectienaam | NIVRA Historisch Archief, UBVU gedigitaliseerd |
| PPN | 344552586 |
| Toegangsgegevens (URL) | http://imagebase.ubvu.vu.nl/getobj.php?ppn=344552586 |
| Signatuur origineel | NIVRAHA149 |
| Evaluatie |
Beschrijving
| Titel | NIVRAHA149_00614 |
| Transcript | 590 THE ADMINISTRATION OF INCOME [Bk. Ill ingly loyal to the company, the policy to be followed is somewhat different from that so far suggested. In this case small dividends should be begun sooner, in order to strengthen the investment position of the stock, but especial care must be taken that a rate be not established which cannot be maintained. On the other hand, when the common stock is held entirely by the management there is no need of exerting a special effort to preserve its investment character, except that a dividend once begun should be maintained in order to preserve and strengthen the general credit position of the company. Action of the Union Pacific Directors In closing this discussion no more comprehensive summary of sound dividend policy can be found in the whole annals of American financial history than a certain resolution of the Board of Directors of the Union Pacific Railroad. An entirely new and very able management acquired control of the road at the time of its reorganization in 1897. During the succeeding two years large sums of money were expended in betterments. Control of connecting roads was acquired at low prices and through able management enormous equities were built up for the benefit of the Union Pacific Railroad. And the gross and the net earnings had increased by leaps and bounds so that the general credit of the road was becoming firmly established, notwithstanding its previous unfortunate history. Yet the directors, on the crest of this initial prosperity, refused to pay the full dividend on the preferred stock and passed a resolution which began as follows: "Whereas the company has been in possession of all its main lines barely a year, and of its branch lines a less time, and is therefore without a basis of experience for determining any fair average of results for unequal years, and it is not deemed advisable to add to the bonded debt, but to continue a liberal application of surplus income to permanent improvements and additions and to such uses as will secure economy of operation and increased earning power, and thereby establish stable and permanent values for its securities and a |
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