Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1909-02-19
T0bACC0TRUST
COMBINATION
LAID BARE
INTERESTING HISTORY
OF GREAT MONOPOLY
Commissioner of Corporations
In Report 10 President Crit
ciSeS Methods of Men Who
Captured Smoke Industry,

IBy Morning Journal Special Lsased Wirel
Washington. D. c.. Feb lS.--In a
report transmitted to President Roose-
Welt today Herbert Knox Smith
Commissioner of corporations pre-
sents some highly interesting history
of the organization OF the Tobacco
Combination" which, in tine magni-
tude of its business operations, IS one
of the greatest organizations in Amer
lea. The report is a result, in part,
Of an extensive investigation into the
tobacco industry made by the bureau
Of corporations. Subsequent reports
win deal with the control of the to-
hacco industry with prices and pro-
fits. and with competitive methods.
Today's report sets forth the rise of
one Of the great combinations Of the
county In his letter of transmittal,
Commissioner Smith says that it deals
with the history. from the standpoint
of its organization, of the great To-
bacco Combinations. Starting in 1890
as the American Tobacco company
a manufacturer OF cigarettes, with a
capital of S25,000000, the combina-
tion has now net capitalization Eek
cludmg inter-compan holdings) OF
$316,346,S21 1t has absorbed about
$50 separate concerns, and now con-
trols substantially four-fifths of the
output of each important kind Of
tobacco manufactured in the United
States, with the exception of cigars.
TITS history also presents important
features of stock manipulation. The
financial transactions Centering around
the organization of the Consolidated
Tobacco company in 1901 is especl-
ally noteworthy. At that time small
body Of directors and stockholders in
the combination greatly believed that
the profits of the combination could
be greatly increased i'm the immedi-
ate future. They organized the Con-
.solidatcd Tobacco company and Offer
ed its bonds in exchange for he COM
mon stock of the American ana the
Continental in order thus to secure
for themselves most Of the increased
profits about to accrue The profits
aceruiag 10 the common stock of the
American and Che Continental; after
it's ACQUISITION bV the Consolidated M
creased greatly. ana tho small body on
men controlling the last named com
pany-so small. in fact, that six OF
them held y majority of its stock ana
thus controlled tho entire combina-
tion- became entitled to millions of
dollars which, had it not been for
the consolidated transaction. would
.ahve gone to the original common
stock holders
Commissioner Smith says that in
fairness. it should be added that this
offer of exchange was made with no
ooncealmcnt of the fact that the
offer came from the principal officers
and directors of the two companies
hut. he adds.
"rhc conduct Of this group Of men
is proper subject for criticism now
ever. because they could forcscc much
better than outside stockholders the
large prohts about to accrue. ThcY
occupied a nduciarv relation to the
outside stockholders and should nave
shared with them equally the specia
knowledge acquired by their position.
The report discusses at length the
methods bv which the Tobacco COM
hination has been developed, including
the bogus independent concerns or
the combination 1t points out clearly
that "the leading purpose of the men
who have controlled IL has been 10
dominate the tobacco Industry. Thr
report contains not only the detaiia
of the financial operations of the com
hination in its rise, but also many
interesting sidelehts on the schemes
employed to make the combination
paramount in the tobacco Industry