The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1909-02-26
REPORT ON THE
TOBACCO TRUST
Some Interesting Figures Civ
en- by Commissioners of j..
Corporations Smith.
INDUSTRY UNDER CONTROL
COMPETITORS FORCED TO SELL
OR DRIVEN OUT OF BUSINESS.

Washington, D. c., Feb. 25.-Herbert
Knox Smith, commissioner of corpora
tions, today made public subdivisions
2 and of part 1 of mis- report on the
tobacco industry. They deal with the
present organization of the tobacco
combination, so-called, its degree of
control in that industry and the devel-
Opment of that control.
These divisions of the report, result
ing from a thorough investigation into
the business operations of the tobacco
combination, contain an elaborate dis
cussion of the methods by which the
manufacture of tobacco, except cigars,
has come under the control OF q COM
paratively few capitalists. Commits
sioner Smith says:
In the tobacco combination are the
American Tobacco company and its
three great subsidiary combinations,
the American Snuff company, the
American Cigar company and the Brit
ish-American company, besides eighty
two other subsidiary concerns doing
business in the United States, Porto
Rico and Cuba. The combination rep
reSents a total net capitalization of
over 1915, 900, 900. A very small group
of ten stockholders controls so per cent
of the outstanding voting stock of the
American Tobacco company, through
which company the entire combination
is controlled"
Some Bogus independents"
A list of the subsidiary companies
controlled, including over twenty
hitherto secretly controlled so-called
bogus independent concerns is given
in the report. 1t is shown also that the
combination is practically the only i'm
portant exporter of tobacco manufac-
lures from this country Astonishing
figures are given in respect to the de-
velopment of the combination. In 1891
1t controlled SO per cent of the business
of cigarette manufacture, and this pro-
portion practically is maintained to-
day. In cigars its output increased
from 4 per cent of the business in 1897
to II 40 per cent in 1906; while in
manufactured tobacco (chewing, smok-
ing, fine cut and snuff the combina-
tons output increased from per cent
of the total in 1891 to n per cent in
1906. Finally, in 1906, the combination
controlled of these separate products,
respectively, plug, go per cent; smoking,
II per cent; fine cut 81 per cent, and
snuff. 96 per cent" In the year 1906
the combination used in the manufac-
ture of its various products nearly
3OO,0O0,O0O pounds of leaf tobacco.
Competitors Absorbed.
AN idea of the absorption of coma
peting plants" says Commissioner
Smith, land of the changes through
combination within the last decade NAV
be had from the fact that in 1897 the
combination had ten plants. each pro-
ducing over $4,000 pounds of manufac-
tured tobacco or snuff per year, while
there were 243 Independent plants of
the same class. In 1906, on the other
ha nd IoI
plants of this class and Independent
manufacturers 40. Especially con-
spicuous has been the absorption OF the
large plants. In 1897 the combination
had eight plants, each producing 1,000,-
600 pounds of these products per year
while its competitors had forty-six
plants. In 1906 the combination had
thirty-four plants of this size, and in
dependent concerns only seventeen.
Driven Out of Business.
Despite the combinations enormous
expenditures for advertising and in
schemes and despite frequent price
cutting by means of its so-called fight
Ling brands, there has been, in several
branches of the industry, constant
tendency for competitors to gain bust
ness more rapidly than the combination
and thus to reduce its proportion of the
output. This tendency has been over
come only by continued buying up of
competitive concerns. Many weaker
concerns have been virtually driven out
of business or forced to sell out to the
combination, either by reason of the
direct competition of the latter or as an
indirect result, of the vigorous compe-
tition between the combination and
| larger Independent concerns. In the
case 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"
MADE NATIONAL BANK.