The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-11-26

pany were nothing more than 1.-THE law
full exercise of their unquestioned rights,
Which are indispensable to the exercise
OF competition or the conduct OF trade"
protest must be made unless the ruling
is meant to apply only to those acts which
resulted in the inability of the st. Paul
dealer to buy the goods he wanted For
certainly the general acts of the trust,
whereby it has built up the monopoly OF
which it took advantage in this instance
are, whether lawful or not, something
much more than Indispensable features
of a proper conduct OF competitive trade.
The Tobacco Trust as it exists today has
been developed from the American To-
bacco Company which was organized
about thirteen years ago, having then lit
tie capital outside the ownership of a re-
markable cigarette-making machine. 1t
now comprises a large number of con-
stituent corporations with an aggregate
capitalization of something like five hun
dred million dollars.
The bulk of these securities have beel
issued in the way now so familiar in
connection with trust organizations and
are backed by nothing substantial. 1t is
in the obviously difficult effort to sus-
tain this enormous mass of obligations
that merciless oppression has been prac-
ticed. To pay the heavy dividend and
interest charges and the manufacturing
profits on perhaps ten times the value
of the trusts actual possessions the to-
bacco planter has been squeezed on the
one hand and the tobacco consumer on
the other. The price OF the raw mate
rial has been forced down and excessive
profits charged on the manufactured pro-
duct. AS an illustration of what has
been done, take the $157, 100000 issue of
four per cent Consolidated Tobacco
bonds, based only on the dividends of COM
mon stock, like the so-called income bonds
that figure in dubious railroad finance.
The interest on these must come after
eight per cent. dividends have been paid
on $4,000 900 of American Tobacco pre-
ferred shares and seven per cent. divi-
dends on $50 200, 900 of Continental To
bacco preferred besides millions of de-
bentures and other unknown expenditures.
Plainly the sustaining of this enormous
inverted pyramid of securities must re-
quire the taking of stupendous sums out
Of the business.
That it has been done thus far is be-
cause both the leaf tobacco industry and
the millions of users of cigars, cigarettes,
prepared tobacco and snuff have been
ruthlessly forced, through the usual
methods of monopoly, to contribute.
Whether it can be done much longer is
question of more immediate concern 20
the security holders. The Tobacco Trust
is trying to duplicate the success of the
Standard Oil Company, but with far less
resources and with far less executive and
financial ability in its management. Its
leading organizer is also tied up in the
Virginia Carolina Chemical Company,
known as the Fertilizer Trust,
concern which last summer passed its
common dividend and had to pay sixteen
per cent. interest on a six million dollar
lean from a banking syndicate. This Ger
tainiy does not look as if the leaders in
the Tobacco Trust were in easy circum
stances. In fact, 1t suggests that there
may be in the Tobacco Trust something
very like the Cordage Trust of painful
memory If it were not for the posi-
bility, if not probability, of coming
collapse of an ambition that seems to be
overlapping itself, there would perhaps
be more eager searching for some form
of legal action that would be more sue
cessful than the st. Paul suit in checking
the heavy oppression of planter, ware
houseman and consumer alike.