Business: Standard Oil Dividends

Much of the reverence long held for Standard Oil companies by the investing public bids fair to depart after the recent spell of omitting dividends. In rapid succession directors of Atlantic Refining and Standard Oil of Kansas have decided to give nothing to stockholders, which goes to show that even Standard Oil companies are human and fallible.

Not so many months ago, some of these companies were very much undercapitalized. Atlantic Refining was a conspicuous example. Surplus was out of all proportion to capital on the balance sheet. Also, political liberals in Washington, about that time, began to demand a tax on corporate surpluses. To avoid such an unpleasant occurrence, generous stock dividends became the order of the day. Atlantic Refining, for example, declared a 900% stock dividend. No longer was under-capitalization so common among Standard Oil companies.

Unfortunately, conditions in the oil business got steadily worse, owing to overproduction. Nor has this tendency yet been checked. For the week ending Aug. 9, production of crude increased over the preceding week 5,850 barrels daily. Stocks of both crude and gasoline have become unusually great. Not until these stocks can be reduced and higher prices secured will any lavish dividend policies in the oil business be generally witnessed.

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