Chapiter 12 — What Is a Dividend?



When a company realizes a surplus from its operations, after having deducted the necessary amounts to meet its obligations, and after having set aside the required funds for depreciation and redemption, it distributes the rest among its shareholders. If, for example, the company's share-capital is $500,000, and the distributed clear profits are $30,000, the company will declare a 6% dividend, because $30,000 represents six-hundredths of $500,000. The man who has ten-$100 shares in this company, will get a dividend of ten times $6, that is, $60; the one who has twenty shares, will get a dividend of $120. If the clear profits are only $10,000, the dividend will be only 2 percent. And if there remains no clear profits after all necessary payments, there will then be no dividend. The dividend therefore presupposes a surplus.

The granting of dividends to the shareholders does not cause them to lose interest in their company. It is just the opposite that takes place. If these shareholders are also employed by the company, if, by their work, they contribute to the production of manufactured articles in the plants of the company, will they become lazy, become lax, because they draw dividends, over and above their wages or salaries? It would be stupid to think so. They know that only an increase in the volume or in the quality of production will bring more dividends. No doubt they will devote themselves more industriously to their work.

Who is entitled to dividends? The shareholders, those who have invested funds in the firm, are entitled to dividends. If it is a co-operative firm, the producers themselves, after having drawn their wages or salaries, are also entitled to their dividends, to their share of the surplus, if there is any, because these producers are the shareholders. And once again, where do the dividends come from? They come from surpluses; their figure is determined by the surplus figure. The dividends are not money taken from certain shareholders to give to others. The dividends do not create debts for the company, since the company actually distributes its very surplus.

These elementary notions are not new to anyone, but to recall them may be helpful when we deal with the “national dividend” or the Social Credit dividend. It is so common to hear from critical quarters, who perhaps have not even looked into the subject: “These dividends, they are like welfare; they will make people lazy... No one will want to work anymore, etc.”

Of course, these critics are making mental exceptions of themselves. They never believed for one moment that if they would draw a dividend of some five-hundred or six-hundred dollars a month, that they would then lie down on long chairs, thanking the Lord for having put their daily bread into their mouths. No, not they, because they have a splendid moral outlook, a developed intelligence, and they will always be ready to work to raise their standard of living... But it is of the others that they are thinking about, the “mob”, the publicans without virtue or intellect whom they do not deign to look at, much less educate. For these puritans, the “mob” exists to water the earth with its sweat and tears... and live in perpetual privation.

Yet, each person today is entitled to the heritage bequeathed by past generations. When a person dies and leaves goods to his heirs, does he question whether these heirs are just people or sinners? Is their inheritance denied, under the pretext that they will not know how to use it profitably?

A few considerations are suitable here on this notion of common heritage, of which all living people must be beneficiaries.


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