The times. [volume] (Richmond, Va.) 1890-1903, 1894-12-05
CIGARETTE IRUsi LiFE At sTAhE
A Notable Litigation in which inc Char'''
i.s onght to bs Dissolved.


'-i IN the suit Of John r., Miller & CO.;
tobacco iobbers of Newark y. De- dsd'ns'
tbo American Tobacco Company, the SO
called "Cigarette Trust has got on It's
hands the battle Of its lie.
The suit was brought in the Court OF
Chancery Of New Jersey, ana pehdins
ite trial a vast amount OF testimony -
beirr gathered by the la Eyers represent
ING the complainant tending 10 Sho" thdt
ne American Tobacco Company Is
trust" I'm the most obnoxious sense 9l
the word, and that it is pracucally noiu-
ing the tobacco trade oil the "holc SOuii-
trv by the throat. - III, >,
the most interesting ana lhlpoL an III ne
trusts became actuaHues. ana Ip 20 se 10
rasI1lt will probably hang the :ate OF sew
oral other similar asgTesaions Oh YasC
cfpitaI. The issues in this case nay
moi so far been clearly set before the
public .,oi,. for vaars
nroVious 70 January. 1890, the FIVE great
cigarette manufacturing nrms OF tne
country the Allen i g Gin'J &
Company. Of Virginia: W: :. hlii i..'a. q
Co. Of Rochester, y; ~ 6;,,, Goos sons g
CO. of North Carolina, ana the hiI my
Tobacco Company. of New f0fk-WeIe
engaged in a most active compeu,tlon
and spent vast sums yearly ,, III ad' IN
Using and advancing their Individual m m
terests nv rebates to iobbeIs and oiters
&c nicfures and prizes to consumers.
In this way, II is said, they spent
from 100000 to $4,000 apiece E g5diiS.
me Dukes. for instance, gave loDpels
what they called a monthly uiNldelo
for advancing their interests. Allen u
| C;inter accomplished their END by
christmas presents.
EFFECTED A COMBINATION.
Combinations were effected througn I,,o tI NJ,
mediation Of promoter. ana Oh '@liu,'I >
- iSqO the American Tobacco company
was Incorporated. IT was capitalized az
| S2S o00 900 of which 100000 were devoted
| 10 purchasing the plants, Appliances Sc
crets. trade marks ana sGou WIZ ii 1tt "a
several concerns. Inc DdldIle0 - "'ieS~"
| to be wafer ,-.,.-.,, .,,o
| According to an agreement between me
Darties the stock was 10 De u!Elutu
| among the concerns on basis OF I'M .t ~
per cent. each to A IN GinteI ana me
| Dukes and ten per cent each 10 me
| others. In the articles of incorporation
| however. this did not appear zen men
members of the several companies, dp-
nnaring as equal stockholders. At TINS
! lime the company controlled az least
ninety-five per cent OF the cisatttle man
ufacturing interest OF the country 49,.
The urinary object of the combination
was 10 save the enormous sums previous
! w spent in competitive advertising anu
| Inducements, and had the company CON
| tented itself with this, II would nave
| had a clear path before IL. $500 80
one Of its first acts. however was 10
devise system, the practical effect OF
| which was TO cut off all compel tI1h
! The plan was exceed giy ingenious me
| company merely refused to sell cigar
| cites to jobbers at all, but made each
| customer factor or commission nief-
| chant. and bound him by an agreement
SHOWED ITS HAND.
The significant points in this agreement
are these: FIRST, that the agents sell ON!
| at prices fixed by the company setpinu,
that they guarantee all safes soIne t ii'i,o
that no commission agent IS fe4uHtd ~
do i'm anv other business; thlrd, thal ny
agents" retain a fixed commission, ana
retain also an additional COMMISSION ol
per cent. for remittdnces WITHIN zen
This was merely another way OF SAYING
so per cent off for cash sales. IN otHel
words. practical sales were mace 70 tIe
dealers with the usual GasH pei na f"r,n
the diffeIenc only DelhS III wv
Vi Further' the dealers were to guarantee
the company against loss on stoth urt ~ -
FOR They were also to receive the usual
commissions. provided they should co
operate with the company ana pIoInote
lis interests and handle its cigarettes 10
it's satisfaction" and If they dld comply
win this the company reserved the right
TO withhold commissions in tuture. -
This seemed innocent enough. ana an
the jobbers in the country signed Int
agreement II was not until then thdl
the company showed the full strength
of its hand, and indicated in an unlnis-
taxable way that what II meant by tHe
agents promoting its interests was that
t6ev refrain from selling any other
brands ,, .- f,,.
continuation cigarettes, the dealers had no
option but 10 buy or be ruined.
Less than six months after the company
baoan lie on.~1tions this issue came up
i'm Texas. The company refused TO sell
to jobbers there who handled other cigar
cites, ard warrants were issued Tor the
arrest of Mr.. Duke. the president and
others on a charge of violating the anti
trust laws of the state. They were ar
rested and heavily fined. Since then they
have not exacted their demands in Texas
hut that is the only free State to-day;
II Was about this time. too. that the
company was compelled TO buy out I'VE
rival companies in the South. For thls
purpose the capital stock was increased
10 S5 900 900 The average earnings on
this stock. S2S. OoO. 900 Of which is alleged 10
be unadult Grated water" has been Il
per cent for common stock and per
cent. for preferred.