Journal Article Unemployment, Basic and Monetary: the Classical Analysis and the Keynesian Get access D. G. Champernowne D. G. Champernowne Cambridge Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 3, Issue 3, June 1936, Pages 201–216, https://doi.org/10.2307/2967628 Published: 01 June 1936
Journal Article Italian Attempts to Encourage Population Growth Get access D. V. Glass D. V. Glass London Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 3, Issue 2, February 1936, Pages 106–119, https://doi.org/10.2307/2967501 Published: 01 February 1936
The article deliberates on whether the stock dividends should be considered as income in hands of the recipient. Numerous views are being given on the subject. However, the views expressed are conflicting because different aspects of the problem are being emphasized by different persons. Under the series of Federal income tax laws since the sixteenth amendment was passed in 1913, dividends have been subject to tax in the hands of the recipient. The act contained no mention of stock dividends, but the Bureau of Internal Revenue interpreted the law to include stock dividends as income and hence subject to tax. This interpretation was questioned by a taxpayer, H.R. Towne, who carried the case to the United States Supreme Court. The court decided in favor of the taxpayer, declaring that stock dividends were not taxable as income under the act. The court ruled that a stock dividend really takes nothing from the property of the corporation, and adds nothing to the interest of the shareholders. Its property is not diminished and their interests are not increased. The proportional interest of each shareholder remains the same.
The article asserts that the general law governing the value of capital goods has been known for some time. It may be stated briefly by saying that any capital good may be bought or sold for the present value of all future services expected from it. This rule is continuously being applied in practice by bond-traders and all bond tables are based upon it. Nevertheless, apparently no one has made systematic use of it to explain the formation of common stock values. Discussions upon the subject are frequent, but they seldom clear the hurdle of terminological difficulties. To review this preliminary difficulty, the article discusses the behavior of fair market value and yield of common stock. It highlights that when the earning rate equals the money rate, the expansion rate and the horizon lose their significance. The fair market value of the investment will equal the book value and the yield will equal the money rate. Moreover, when the money rate is very low, the fair market value of investments is very high, and their yields correspond closely to their expansion rates.
The article focuses on defining the concept of goodwill. Initially goodwill was defined as nothing more than the probability of old customers returning to the old place. In one instance, goodwill has been defined as an intangible property which, in the nature of things, can have no existence apart from a business of some sort that has been established and carried on at a particular place. Goodwill is the favor which the management of a business wins from the public and the probability that all customers will continue their patronage. It is the general public patronage and encouragement which a business receives from its customers on account of its local position; that is the subject of value and price and of bargain and sale, though intangible. In this definition, the patronage concept is dominant, although its dependence upon location is still mentioned. In general, it may be stated that the emphasis upon the local aspect of goodwill has declined gradually, although there has been considerable overlapping of views in point of time.