Expropriating The Public

Maoriland Worker, Volume 12, Issue 295, 25 October 1922, Page 1

Expropriating The Public

Big . '.Dividends —- But Mr. ; Massey Reduces Income Tax

As The Maoriland Worker has said'-before, the effect-: of the M'assey Government r s Bill,'now before Parliament, to.reduce the tax on SUPER-INCOMES, will be to surrender to the wealthy revenue amounting- to nearly; £1,000,000 a year. The chief beneficiaries of this brazen piece, of class-legislation are the banks, insurance companies, shipping.-combine, big commercial firms and thelarge land monopolists. In his determination to "RE-: DUCE THE BURDENS- OF THE PROSPEROUS;, CLASSES," Mr. Massey, at the Levin banquet, declared! his intention of going further with the reduction-of income tax, and said" he would put through the present Bill* even though "IT MIGHT MEAN SHOWING A DEFI-; CUT AT THE END OF THE YEAR.». In this case, it will, then be necessary to borrow to meet the deficit, so that in order to enrich still further the cohorts of BIG BUSINESS AND FINANCE, New Zealand will be placed more ■ deeply in pawn to the usurers. MENDACIOUS HUMBUG. , Simultaneously with these concessions to the income? ( and sniper-income taxpayers, the contention was advanced by liberal and Tory politicians that the workers would stand to benefit; indeed, one gained the impression that the Government's legislation was as much concerned -with the well-being of the workers as with the satisfaction of the profiteers. -How fraudulent this is is proved by experience. For on the two occasions on which rebates and reductions in income tax have been conceded, wages have' been mercilessly cut. Last year the -rebate was worth: Something in the region of half -a million, and no sooner was it granted than the Civil Servants' salaries were raided to the extent of £800,000. Immediately after, the Arbitration Court utilised a law, passed specifically for the purpose, to lower the wages of privately-employed workers by, roughly, a million sterling, and this was followed by the second cut at the Civil Servants. Within a week from the introduction of the present legislation the Arbitration Court announced another reduction in wages equal to approximately £750,000* To the wealthy, therefore, has been given. an added income of close on £1,500,000, while from the workers nearly £3,000,000 has been snatched away. The income tax legislation, which was to improve the conditions of the workers, has left them with less than ever. j £22,000 A YEAR. > In recent issues The Maoriland Worker has given Jjro.of by fact and" figure of the colossal profits made with-*, m the _>ast year or so by banks, shipping companies, insurance companies and the like, and in every case the dhddends paid, after luff provision had been made for taxation, DWARFED THOSE OF PRE-WAR TIMES INTO INSIGNIFICANCE. The evidences are manifold in company reports, with few exceptions, that, the slump notwithstanding, Big Business is coining money, and of the exceptions it is almost invariably the case that accumulated reserves have permitted the payment of normal dividends. And what is true of companies applies to certain very favoured individuals, who/deign to live upon this part of the planet with us. In the House only recently, Mr. Poland said: "I SEE BY THE YEAR BOOK THAT THERE. ARE SEVEN PROFESSIONAL MEN IN TBE COUNTRY WHOSE TOTAL ASSESSABLE INCOMES AGGREGATED NO LESS A SUM THAN £152,000 FOR LAST YEAR, WHICH GIVES APPROXIMATELY £22,000 A YEAR EACH. . . . THEY WERE M 0 DOUBT DOCTORS OR LAWYERS!" In these cir-. .cumstaiices, then, it is apparent that no reason exists for i."tlie income tax reductions at a time when the great majority of the workers are at their wits' end to secure the elements of a decent living, apart from the conventional '"*ory desire to augment the wealth of'the rich and still further impoverish the poor. This will stand out with a . Stark conspiedusness if we set out some aspects, of in-- ; jjirancc company finance after the manner followed "by ( ■ *fie Worker in a recent issue, and taking as our source of ' that (to Socialist agitators) very valuable ' Publication, "The Insurance Quarterly," distributed ffvatis by the Southern Union General Insurance Company ' f Australasia, Ltd. . ! MILLIONS FOE NOTH-N& v On page' 7 of the June number of " The Insurance Parteiiy" appears a table jjh'owiughow much the share- ] ftolders in six of the principal insurance companies in } Australasia actually paid up on the shares taken out, and ( 'fm was distributed to them FOR NOTHING FROMJ.t

RESERVES; and it is indeed a staggering' illustration of the art of making the public disgorge the greater part of Big Business's capital requirements. " This table reads:—...

From From Total Shareholders. Reserves. 6£- £ £ £ N.Z. Ins. Co., Ltd 300,000 450,000 750,000 S. British Ins. Co., Ltd. 100}000 650,000 750,000 Standard Jns. Co., Ltd. 75;000 ■ 25,000 100,000 Queensland Ins. Co, lAd. 75,000 425,000 500,000 C. Mutual Ins., Co, Ltd. 100,005 200,003 300,008 United F. and M. Ins. Co., Ltd ~ 100,000 200,000 300,000

These statistics reveal that the shareholders paid up themselves ONLY £750,005, and thai THEY'GOT FROM 1 THE POLICY-HOLDERS AND INVESTMENTS, BY; WAY OF PROFITS UNDISTRIBUTED AS DIVIDENDS! AND ACCUMULATED AS RESERVES, £1,950,003. From profits they received bonus capital equal in amount to MORE THAN TWICE AS MUCH AS- THEY THEMSELVES IN VESTED. And, in addition, they got their animal dividends, and at the present moment, according i to the Wellington Stock Exchange List, the four companies in which New Zealand is particularly interested— I the New Zealand, the South British, the Standard, and; the National (this last is not included in the-above- Usi.,l but _th.G sliai'ehoMers liavfi- contributed only £100,000 to; the capital, while reserve profits have contributed another £100,000), have FURTHER RESERVES IN HAND , : OF, ROUGHLY, =£2,800^00! Now, at what rate did these; yearly dividends pan out? "The Insurance Quarterly, 5, \ •same number, has an article about "the NATIONAL INSURANCE COMPANY OF NEW ZEALAND, and this' says:—

BETTER THAN BEATING BOOKIES.

"Another successful year for the above company was brought to a close in 1921, for, although less profits were shown, it was ACTUALLY AN IMPROVEMENT on any previous twelve months. . . . Taxes oi '£19,000 in 1920, however, were partly met BY A SPEC JAL RESERVE FUND, while the year 1921 SHOULDERED THE ENTIRE TAXES PAID DURING THAT PERIOD, AMOUNTING- TO £17,000; hence the smaller i;et profit shown in the following table, which gives interesting figures of growth over thirteen years past:— -

Sept. Profits. Dividends. Reserves. 1908.... £30,593. .... 15 p.c. or £ 15,000 .... £264,930 1910 .... 40,036 .... 175 p.c. or £ 17,500 .... 302,898 1914 .... 38,330 .... 20 p.c. or £20,000 .... 321,288 1912 .... 43,412 .... 25 p.c. or £25,000 .... 339,700 1913 .... 52,209 .... 25 p.c. 0r'£25,000 .... 366,909 1914..... 35,644 .... 25 p.c. or .... 377,573 1915 .... 42,347 .... 25 p.c. or £25,000 .... 394,920 1916 .... 48,511 .... 25 p.c. or £25,000 .... 418,431 Transferred to capital, £100,000 .... 318,431' 1917 .... 57,633 .... 125 p.c. or £25,000 .... 351,004 1918 .... 56,710 -- 15 p.c. or £30,000 .... 377,774 1919 .... 45,655 .... 15 p.c. or £30,000 .... 393,429 1920 .... 63,882 .... Mi p.c. or £32,500 .... 424,811 1921 ....' 58,957 .... 16i p.c. or £32,500 .... 451,268

SHAREHOLDERS' EL DORADO.

Putting it briefly, • this company,, in 13 years, paid £327,500 in dividends, gave its shareholders a FREE GIFT OF £100,000 OF CAPITAL, and added practically £190,000 to its reserves. In all, in one way and another, these lucky shareholders got in the 13 years, roughly £620,000—a sum little short of "the -TOTAL CAPITAL PAID UP BY THE SHAREHOLDERS OF ALL THE SEVEN COMPANIES HERE ALLUDED TO. And they only invested £100,000 of their own money altogether! Not bad! 620 per cent, of profit; and MR, MASSEY REDUCES THEIR INCOME TAX.

But let us proceed further. After pointing out that [this- company's last year's '-'net premiums were, the first to exceed £200,000," "The Insurance Quarterly" goes ou jto say: "Substantial protection for policy-holders is evidenced by the fact that funds exceed £650,000, which is three times last year's net premium income, and total resources could meet claims-seven-times last .'year's losses.. IN SPITE OF THIS STRONG POSITION, ORIGINAL SHAREHOLDERS ARE TO-DAY RECEIVING 324 PER CENT. PER ANNUM IN CASH DIVIDENDS, FOR IN 1916 THEIR CAPITAL WAS DOUBLED BY, A BONUS -FROM RESERVES." A good reason why workers' wages should be cut. .....,/,, ._■ • £6/10/- P'O-i : -£l—A_*m TErnS SOME. ' Now let. us glance at the affairs of the South British Insurance Company, whose annual meeting is to take place on the 26th of this mouth in Auckland. We will quote "The Insurance Quarterly": "With a paid-up caßita\pf.£7__O,OoO i NO LESS THAN. £650,000 HAS.

..-[BEEN SUPPLIED FROM RESERVE FUNDS, leaving l ; only £100,000 of shareholders' money invested. This lat- . ter figure stood the eompanw till 1912, when dividends • were declared at the rate of 3U PER CENT. PER AN- • ,NUM, but then bonuses were commenced in the way of capitalising reserves, and last year the 13 per cent, was ' paid on -the increased capital, WHICH IN REALITY, '.; MEANT 79 PER CENT. TO ORIGINAL SIIAREHOLD- ; ERS* Thus those that joined the company at its birth : and still hold their stock ARE MORE THAN THREEQUARTERS OF, THEIR FULL CAPITAL j BACK EVERY YEAR. In.addition to this, .the latest f quotation for shares stands at £1/12/-, so that THE _i COULD DISPOSE OF THEIR HOLDING TO-DAY AT :i 1500 PER CENT. INCREASE OF CAPITAL!" \ THE GOLDEN SHOWER. The. profits, dividends, and reserves of this company. , for the last ten years are as follows:— Year. Profits. dividends. Reserves. 1912 .... £83,635 „„ 37., p.c. or £37,500 .... £603,295 i £200.000 Reserves transferred to Capital .... 403,295 1913.... 91,070 .... 13 1/Sp.c. or £40,000 .... 454,36b" i 1914 ..... 88,1375 .... 15 p.c. or £45,000 .... 498,240 1915.... 134,880 15 p.c. or £45,000 .... .588,120 I - - 1916 .... 109,777 .... 15 p.c. or £45,000 .... 631,629 ; Written off Investments, £21,268. 1917 .... 151,779 .... 16 p.c. or £47,500 .... 735,908 \ £120,000 Reserve Fund capitalised 615,908 \ £80,000 other Reserves capitalised. ]-. 1918.... 162,434 .... 10 p.c. or £50,000 .... 703,342 } Written-off premises, £25,000. »■ 1919 .... 150,133 .... Hi p.c. or £57,500 .... 780,975 Written off premises. £15,000. 1920 .... 237,618' .... 14 p.c. or £70,000 .... 948,593 Contingency Reserve taken in. £20,000 ...: 968,593 Additions to Resets, £85,531 1,054,124 ; i Reserves capitalised, £ 250,000 804,124 1921.... 225,115 _. 13 p.c. or £79,167 .... 950,072 The position with this group of shareholders is then? that in ten years past THEY GOT £650,000 OF CAPITAL FOR NOTHING, their reserves increased by £350,000, and they received in dividends £516,000 odd. THEY PUT ,IN ONLY £100,000, and in the past decade alone got £1,518,000 —or a return of 1.516 per cent., or 151.5 per • cent, every year. And, according to the Wellington Stock Exchange List for August, 1922, their reserves had jumped from the 1921 figure above to £1,013,450, which is over £250,000 in excess of ALL THE CAPITAL OP. THE COMPANY, bonus and paid-up. It is these reserves, and THE FREQUENCY OF BONUS-CAPITAL PAYMENTS FROM THEM, which explain the eagerness of investors to purchase shares, although at the quoted price (£l/19/-per share of £I—the original shareholders ' have only paid up 2/- —in August) the dividend works ; out at less.than 5 per cent. • SLUMP—BUT A 92 PER CENT. LffiVEDENB. In the annual report for the year just ended, to be presented to the meeting of this company on October 28, ' the' amount available for distribution is said to be £230,570. Of this £35,000 is to be transferred to the reserve, £111,811 to be carried forward, and £83,333 allotted to dividend (£4,100 more than last year, although this year is one of slump), at the rate of 1/10 per share.; Seeing that the original shareholders only paid up 2/- a share, this means that they will get a dividend of NEARLY 92 PER CENT. In the circumstances, we will withhold bur tears wlien Mr.'Massey invites us to lament the unhappy fate of ladies and gentlemen with their money in insurance companies*

The Maoriland Worker lias said before that no combination of dividend-hunters should be allowed to exact . such monstrous tribute from the people of New Zealand, "and they are only .allowed to do it because the Massey Government is at least as concerned as much about their opportunities to ..garner profit as it is about, the success of; our National Insurance Business. Were -it not so, the State insurance premiums would be considerably reduced as a preliminary to the-monopoly of all insurance, so that the policy-holders and the public generally might have their requirements met under the most favourable conditions and at the most economical-cost.- .We say further that to reduce the income tax payable by such concerns as these, contemporaneously with the lowering of thousands of workers' wages to'below £4 per week, is nothing short of a scandal and disgrace, which should call frofil the masses of the people Ihe energetic action required id destroy the Government so brass-faced as to be guilty ©f ... . " -*6.J - It,