The Mena weekly star., 1909-02-25
'FOR MORE PROFITS
COMMISSIONER OF CORPORATION HANDS TOBACCO REPORT
 TO THE PRESIDENT.
TELLS HISTORY OF A POWERFUL TRUST
Herbert Knox Smith Says Tobacco Combination Is One of the Greatest Organizations In Amerioa--A Cap ital of s25,ooo, 900 Raised to $3t6,- 46,821-Denomlnate the Market.

Washington, Feb. 20.-In a report Transmitted to President Roosevelt Thursday, Herbert Knob Smith, com missioner of corporations. presents some highly interesting history of the Organization of the Tobacco Combi- nation," which, In the magnitude of Is business operations, is one of the greatest organizations in America. The report 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- bacco industry. with prices and profits. md with competitive methods.
 Thursdays report sets forth the rise of one of the great combinations of the country. In his letter of trans initial, Commissioner Smith says that 1t deals with the history. from the Standpoint of it's organization, of the great tobacco combination. Starting in 1890 as The American Tobacco com rany, a manufacturer of cigarettes, with a capital of 25,000,000. the com. bination has now net capitalization Excluding inter-company holdings) of s3l6,346,S21 It has absorbed about 250 separate concerns, and now con trols substantially four-fifths of the output of each important kind of to- bacco manufactured In the United States, with the exception of cigars.
 Fits history also presents important features of stock manipulation The financial transactions centering around the organization of the Consolidated Tobacco company in 1901 are especial iy 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 future. They organized the Consoli dated Tobacco company and offered It's bonds in exchange for the common stock of the American and the Conti- mental, in order thus to secure for Themselves most of the increased profits about to accrue. The profits accruing to the common stock of the American and the Continental: after its acquisition by the Consolidated. in- creased greatly and the small body of men controlling the last named company--so small, in fact, that six of them held a majority of it's stock and thus controlled the entire com bination-became entitled to millions of dollars which, had it not been for the Consolidated transaction. would have gone to the original common stock holders
 Commissioner Smith says that "in fairness, 1t 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:
 "rhe conduct of this group of men is a proper subject for criticism, how ever, because they could foresee much better than outside stockholders the large profits about to accrue. They occupied a fdueiary relation to the outside stockholders, and should have shared with them equally the special Knowledge acquired by their position 2
 The report discusses at length the methods by which the tobacco com bination has been developed. including the bogus independent concerns" of the combination. It points out clearly that the leading purpose of the men who have controlled 1t has been to dominate the tobacco industry. The report contains not only the details of the financial operations of the com bination in its rise, but also many in- teresting sidelights on the schemes employed to make the combination Paramount in the tobacco industry.