The Ogden standard. [volume] (Ogden City, Utah) 1902-1910, 1909-02-19
TOBACCO
PROFITS
HIGH
Smith Gives Interesting
Facts of Tobacco
Combination

Washington. D.. c., Feb. 1e.--In a re-
port transmitted TO President Eoose-
volt today, Herbert Knox Sm.rn. Cum
missioner of Corporations, prosep,5
some highly interesting history or the
organization OF the Tobacco Conbi-
nation. which, il the magnitude OF
Its business operations. is one or tho
greatest organizations in America The
report is result. In part, OF ali OK
tensive investigation into rne uopac-
co industry made by the bureau or
Corporations. Subsequent reports
will deal with the control or the 70.
bacco industry, with prices and pronts,
and with competitive metnoos.
Todays report sets forth the rfbe or
one OF the great combinations or the
country. In his letter OF transmrtrai.
Commissioner Smith says tnal II
deals with the history, rom tne
standpoint of Its organization. OF me
great tobacco combination. Starting
II 1890 as the American TOBACCO COIL
pany. a manufacturer OF cigarettes,
with capital of S25 1000 900. the com.
bination has now net capitalization
| Excluding intercompany holdings) OF
| s316,346.S21. 1t has absorbed apouc
| ESQ separate concerns, ana now con-
| trolls substantially four-fifths OF the
output OF each important kind OF To-
bacco manufactured in the United
States, with the exception of cigars.
Its history also presents important
features of stock manipulation. Tne
financial transactions centering around
the organization Of the Consolidated
Tobacco company in 1901 are especial
ly noteworthy. At that time a small
| body Of directors and stockholders in
[ the combination, believed that the
profits Of the combination could be
greatly increased In the immediate fi-
ture. They organised tho Consolidat-
cd Tobacco company and offered Its
bonds in exchange for the common
stock of the American and the CONT
mental, In order thus to secure for
themselves most of the increased prof
It's about to accrue. The profits aocru.
ing to the common stock OF the Am
erican and the Continental, after its
acquisition by the Consolidated. In
creased greatly; and the small body OF
men controlling the last named COM
pany-so small In fact, that six OF
|
thus controlled the entire combina-
tion-became entitled to millions or
dollars which, had it not been for the
consolidation transaction, would have
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
concealment of the fact that that OF.
fer came from the principal Officers
and directors Of the two companies,
but, he adds:
THE conduct of this group OF men
is a proper subject for criticism, how
ever, because they could foresce muca
better than outside stockholders tne
large profits about TO accrue They
occupied a fiduciary relation 10 the
outside stockholders, and should have
shared with them equally the special
knowledge acquired by their position.
The report discusses at length the
methods by which the Tobacco com
binatIon has been developed. includ'
ing the "bogus independent concerns
of the combination. 1t points out
clearly that the leading purpose ot
the men who have controlled 1t has
been to dominate the tobacco indus
try." The report contains not oniy
the details of the financial operations
of the combination in It's rise, but also
many interesting sidelignts on ne
schemes employed to make the COM
binatIon paramount in the tobacco IN
dustry.