Dividends and Wages in Periods of Depression

July 20, 1931

Report Outline
Dividend Tendencies in Present and Past Depressions
Dividend Policy of American Corporations
Establishment of Corporation Wage Reserve Funds
Special Focus

Dividend Tendencies in Present and Past Depressions

Total dividends paid by American corporations in the depression year 1930 are estimated to have exceeded similar disbursements during the prosperity year 1929 by some $2,000,000,000. Although earnings fell off in the twelvemonth following the stock market collapse, payments to shareholders, especially during the first half of 1930, were in general either maintained at their previous levels or increased. The effects of poor business and falling profits have lately begun to manifest themselves in the form of reduced or omitted dividends, but at the same time numbers of companies are still paying their stockholders at former rates, even though current earnings may be insufficient to cover such payments. Large surpluses accumulated in the recent prosperous years have made this course possible, but the period during which it can be pursued without an upturn in business is obviously limited.

Wage-cutting, while less prevalent in the present depression than in like periods in the past, has taken place to a considerable extent. The purchasing power of the labor group as a whole has been seriously curtailed by widespread unemployment and part-time employment. Even where wage rates have not been cut, factory payrolls have in many instances been sharply reduced through lack of sufficient orders to keep plants in full operation.

The course of dividends so far in the present period of hard times corresponds closely to that of former depressions, with the exception of 1921. Throughout the first months of general financial distress and slowing business activity, shareholders of domestic corporations have received their accustomed income from that source and even additional payments resulting from the previous prosperity. Only subsequently have dividends begun to decline, and if other periods of adversity may be taken as a guide, the reductions in dividend payments will not be so great as the reductions in corporation earnings. Experience also indicates that dividends may be expected to pick up fairly rapidly, once business recovery sets in on a substantial scale.

ISSUE TRACKER for Related Reports
New Deal, Great Depression, and Economic Recovery
Feb. 20, 2009  Public-Works Projects
Jul. 25, 1986  New Deal for the Family
Apr. 04, 1973  Future of Social Programs
Nov. 18, 1944  Postwar Public Works
Apr. 12, 1941  Public Works in the Post-Emergency Period
Mar. 08, 1940  Integration of Utility Systems
Feb. 26, 1938  The Permanent Problem of Relief
Jun. 08, 1937  Experiments in Price Control
Jan. 05, 1937  Credit Policy and Control of Recovery
Nov. 27, 1936  New Deal Aims and the Constitution
Oct. 16, 1936  Father Coughlin vs. the Federal Reserve System
Sep. 25, 1936  Roosevelt Policies in Practice
Feb. 11, 1936  Conditional Grants to the States
Dec. 11, 1935  Capital Goods Industries and Recovery
Sep. 25, 1935  Unemployment Relief Under Roosevelt
Jul. 17, 1935  The R.F.C. Under Hoover and Roosevelt
Jul. 03, 1935  Six Months of the Second New Deal Congress
Jun. 04, 1935  The Supreme Court and the New Deal
Mar. 05, 1935  Public Works and Work Relief
Feb. 16, 1935  Organized Labor and the New Deal
Dec. 04, 1934  Rural Electrification and Power Rates
Oct. 26, 1934  Federal Relief Programs and Policies
Jul. 25, 1934  Distribution of Federal Emergency Expenditures
Jul. 17, 1934  Debt, Credit, and Recovery
May 25, 1934  The New Deal in the Courts
Mar. 27, 1934  Construction and Economic Recovery
Mar. 19, 1934  Price Controls Under N.R.A.
Feb. 15, 1934  Federal Promotion of State Unemployment Insurance
Jan. 10, 1934  Government and Business After the Depression
Jan. 02, 1934  The Adjustment of Municipal Debts
Dec. 12, 1933  The Machine and the Recovery Program
Dec. 05, 1933  Winter Relief, 1933–1934
Nov. 11, 1933  Power Policies of the Roosevelt Administration
Oct. 28, 1933  Buying Power under the Recovery Program
Oct. 19, 1933  Land Settlement for the Unemployed
Sep. 20, 1933  The Capital Market and the Securities Act
Jul. 18, 1933  Public Works and National Recovery
Jul. 01, 1933  The Plan for National Industrial Control
May 03, 1933  Economic Readjustments Essential to Prosperity
Apr. 26, 1933  Government Subsidies to Private Industry
Mar. 25, 1933  Rehabilitation of the Unemployed
Feb. 17, 1933  Federal Cooperation in Unemployment Relief
Nov. 16, 1932  Systems of Unemployment Compensation
Nov. 09, 1932  Policies of the New Administration
Aug. 18, 1932  Emergency Relief Construction and Self-Liquidating Projects
Dec. 28, 1931  Relief of Unemployment
Aug. 01, 1931  National Economic Planning
Jul. 20, 1931  Dividends and Wages in Periods of Depression
Feb. 19, 1931  Insurance Against Unemployment
Jan. 19, 1931  Business Failures and Bankruptcy Administration
Jan. 01, 1931  Federal Subsidies to the States
Dec. 08, 1930  Federal Relief of Economic Distress
Sep. 25, 1930  The Extent of Unemployment
May 16, 1930  Politics and Depressions
Dec. 20, 1929  The Federal Public Works Program
Jun. 08, 1929  The Federal Reserve System and Stock Speculation
Apr. 14, 1928  The Federal Reserve System and Price Stabilization
Feb. 25, 1928  The Federal Reserve System and Brokers' Loans
Economic Crises