The Vinita daily chieftain. [volume] (Vinita, Indian Territory [Okla.]) 1902-1913, 1909-02-19
TABACCO TRUST
LEADS THEM ALL
Commissioned OF CORPORATIONS Tells
Roosevelt of the Magnitude of
the "Tot acco Combination
BY Associatee Press.

BY Associated Press.
Washington, d. c., Feb l9-In re-
port transmitted TO President Roose-
yelt today Herbert Knox Smith com
missier of corporation, presents some
highly interesting history of the or
ganization of the tobacco Combina-
tion, which, in the magnitude of its
business operations. Is one of the
greatest organizations IN America
The reporl IS a result. in part of an
extensive Investigation into the to-
baccO industry made by the bureau
of corporations. Subsequent reports
will deal with the control of the to-
baceo 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 country In his letter of trans
initial, Commissioner Smith says that
it deals with the history from the
standpoint Of its organization, of the
great tobacco combination. Starting
it 1898 as 5he American Tobacco COM
pany, a manufacturer of cigarettes.
with a capital of $4,000 600. the
combination has no net capitaliz-
alton (excluding inter-company hold
ings) of S3l6,346,S21 It has absorbed
about 230 seperate concerns, and now
controls substantially four-fifths of
the output of each important kind of
tobacco manufactured in the United
States, with the exception of cigars
Its history also presents import
ant features Of stock manipulation.
The financial transactions centering
around the organization of the Con-
solidated Tobacco company in 1901
are especially noteworthy. AT that
time a small body of directors and
stockholders in the combination be-
lieved that the profits of the Combin-
alton could be greatly increased in the
immediate future They organized
the Consolidated Tobacco company
and offered It's bonds in exchange for
common stock of the American and
the Continental, in order thus to Sc
cure fer themselves most of the in
creased profits about to accrue The
profits accruing to the common stock
of the American and the Continental.
after its acquisition by the COnsoli- !
dated, increased greatly: and the
small body of men controlling the last |
named cCmpany-so small, in fact |
that six of them held majority of |
its stock and thus controlled the en- |
tire combination-beca entitled to |
millions of dollars which, had it not |
been for the consolidated transaction, |
would have gone to the original com |
mon-stock holders"
Commissioner Smith says that in |
fairness it should be added that this |
offer of exchange was made with no |
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 |
better than outside stockholders the
try. The report contains not only the |
large profits about to accrue They
ever, because they could forsee much I
occupied a fiduciary relation to the
outside stockholders. and should have
shared with them equally the speciai
knowledge acquired by their position"
The report discusses at length the
methods by which the Tobacco Com
binaticn has been developed, includ-
ing the bogus independent concerns"
Of the combination. 1t points out
clearly thai " the leading purpose Of /.
the men who have controlled it has
been to dominate the Tobacco indus
-ry. The report contains not only n
details of the financial operations of
he combination in its rise, but also
many interesting sidelights on the
schemes employed to make the COM
)ination paramount il the tobacco