The White Pine news. [volume] (Ely, Nev.) 1906-1910, 1909-02-20
Relation of History of
Tobacco Trust Com
mands Interest As a
Thriller.
COMMISSIONERS OF CORPORA
TIONs MAKES REPORT TO
THE PRESIDENT On LIFE OF
THE ORGANIZATION.

WASHINGTON. d. G., Feb. Is
In a report transmitted to President
Roosevelt today. Herbert Knox Smith
commissioner OF corporations. pre-
sents some highly interesting his-
tory of the organization of the To
haeco Combination. which, In the
magnitude of It's business operations.
Is one of the greatest organizations
in America. The report is a result.
in part. of an extensive investigation
into the tobacco industry made by
the bureau of corporations. Subse-
quent reports will deal with the con
frol of the tobacco industry, its
prices and profits. and with conf
petitiye methods.
Today's report sets forth the rise
of one of the great combinations OF
The country. In his letter OF trans
initial Commissioners Smith says that
IL deals with the history. from the
standpoint of its organization, OF the
great Tobacco Combination. Start
ing In 1s90 as the American Tobacco
company. a manufacturer of eiga-
rettes, with a capital Of S25 900. 600,
the combination has nov a net capi-
talization fexcluding inter company
holdingD of s3l6.34e.S2l. Il las
absorbed go separate concerns,
and now controls substantially four
hfths of the output of each important
kind of tobacco manufactured in the
United States. with the exception Of
cigars
Its history also presents impor-
"a Af - ~ n a. lat ion
The financial transactions eentering
around the organization of the Con-
solidated Tobacco company in 1901
are especially noteworthy. At that
time small body of directors and
stockholders In the combination be-
lieyed that the profits of the combi-
nation could be greatly increased in
the immediate future They organ
ized the Consolidated Tobacco CON-
pany and offered its bonds In ex-
change for the common stock of the
American and the Continental. In
order thus to secure for themselves
most OF the Increased profits about to
accrue. The profits aecruing to the
common stock Of the American and
the Continetal: after It's acquisition
by the Consolidated. increased great
ly. and the small body of men con-
trolled the last named company-so
small In fact. that six of them held
majority of its stock and thus con-
trolled the entire combination--be
came entitled to millions OF dollars
which. had ii not been for the con-
solidated transaction, would have
gone to the original common stock
holders
Commissioner Smith says that in
fairness, Ii should be added that this
oner OF exchange was made with no
concealment OF the fact that that
ofer came from the principal officers
and directors of the two companies.
but, he adds:
The conduct of this group of men
Is proper subject for criticism
however, because they could foresee
much better than outside stockhold-
ers the large profits about to accrue
fhey occupied a fiduciary relation to
The outside stockholders. and should
nave shared with them equally the
special knowledge acquired by their
position"
The report discusses at length the
methods by which the Tobacco Com
btnation has been developed, includ-
ing the bogus Independent concerns
OF the combination Il points out
clearly that 'the leading purpose OF
the men who have control of 1t has
been to dominate tobacco industry