Omaha daily bee., 1909-02-26
TENMEN RUN TOBACCO TRUST
Secretary Smith DisclOses Secrets Of
Big american Combination.
EIGHTY-FrvE MINOR CONCERNS
Small Coterie Of Stockholders Control
SO Per Cent of Cigarettes, 80 Per
Cent of Plug and II Per Cent
of Smoking Tobacco.

WASHINGTON. d. c., Feb. &.-Herbert
Knox Smith. commissioner OF corporations,
today made public subdivisions II and III
of part 1 of his report on the tobacco in
dustry. They deal with the present or
ganization of tho tobacco combination. So
called, its degree of control in that in
dustry and the development of that con-
troll.
These divisions OF the report, resulting
from a thorough investigation into the
business operations Of the tobacco combi-
nation, contain an Elaborate discussions
OF the methods by which the manufacture
OF tobacco. except cigars. has come under
the control Of a comparatively few capital
lists. Commissioner Smith says:
I'm the tobacco combination are the
American Tobacco company and its three
great subsidiary combinations the Ameri-
can Snuf company, the American Cigar
company and the British-American COM
pany, besides eighty-two other subsidiary
concerns doing business in the United
States, Porto Rico and Cuba. The combina-
ton represents a total net capitalization
of over $Sl6,O0o,000. A very small group of
ten stockholders controls 60 per cent of the
outstanding voting stock of the American
Tobacco company, through which COM
pany the entire combination Is controlled"
A list of the subsidiary companies con-
trolled, including over twenty hitherto
secretly controlled, so-called bogus in
dependent concerns I" is given in the re-
port. IL is shown also that the combina-
ton 10 practically the only important ex-
porter of tobacco manufacturer from this
country. Astonishing figures are given in
respect to the development of the combina-
ton. In 1891 it controlled SO per cent of
the business of cigarette manufacture. and
this proportion practically is maintained
today, In cigars its output increased from
4 per cent of the business in 1887 to 147
per cent in 1906; while in manufacturer
tobacco (chewins. smoking. fine cut and
snuff the combinations output increased
from Z per cent Of the total in 1891 to n
per cent In 1905. Finally, In 1906, the com
bination controlled of these separate pro-
ducts, respectively. plug 50 per cent, smok-
ing II per cent, fine cut 81 per cent, and
snuff Sc per cent" In the year 1905 the
combination used in the manufacture of
its various products nearly 10000, 600 pounds
OF leaf tobacco.
IAN idea of the absorption of Compel
ing plants" says Commissioner Smith,
and OF the changes through combination
within the last decade may be had from
the fact that in 1897 the combination had
ten plants. each producing over $4,000
pounds of manufactured tobacco or snuff
per year, while there were 243 Independent
plants of the same class. In 1906, on the
other hand, the computation had As plants
of this class and independent manufacturers
140. Especially conspicuous has been the
absorption of the large plants. each produc-
combination had eight plants, each produc-
ing over 1000. 900 pounds Of these products
per year. while its competitors had forty
six such plants. 1906 the combination had
thirty-four plants OF this size and indie
pendent concerns only. seventeen.
despite the combinations enormous
expenditures for p advertising and in
schemes and despite frequent price cut
ting by means Of its so-called fighting
brands there has been, in several branches
OF the industry, a constant tendency for
competitors to gain business more rapidly
than the combination and thus TO reduce
its proportion Of the output. This tendency
has been overcome only by continued buy
ing up OF competitive concerns. Many
weaker concerns have been virtually driven
out of business or forced to sell out to the
combination, elnther b. reason Of the
direct competition of the latter, or as an
indirect result of the vigorous compett.
ton between the combination and larger
combination, either by reason Of the
larger and more powerful concerns which
II acquired, however, the combination has
usually secured control only by paying a
high price. The immense profits of the
combination have enabled II to keep up
this policy"