The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1909-03-02

sc in Raleigh.
therefore, stands in a controlling po-
siticn over the entire Tobacco Com
binatiOn with it's SO companies Operat-
ing in the United States, Porto RiOc,
and Cuba. The control Of the Amer
lean Tobacco Company itself rests IL
a very few hands. That company had
at the end of 1906 aftotal capitaliza-,
ton Of a little over 235 millions, m
Guiding bonds, but Of this -eapitaliza-
| ton only about overwhelmingly, the
common stock, amounting to a little
over 40 millions-has voting power
! for the election of directors or for the
ordinary management of the business.
The great bulk of the common stock
is held by members of the directorate
Of the American Tobacco Company \
their intimate associates. The Is .dl-
rectors and 4 other to-
gether own II per cent of this stock.
Indeed. the 10 largest stockholders
Of whom are directors. together hold
over 60 per cent. and these 10 alone
can, therefore, readily dominate the
Duke (president OF the company>- a.
n. Brady, O.. H. Payne, p. a. +
Widener, Thomas F. Ryan, Is. y;
Duke. G b. Schley, the banking ana
brokerage firm of Moore & Schley
(chiefly as agents for %clients), n the
estates of w. C. Whitney and w. l.
Elkins.
capitalization of the Combination.
The American TobaccO Company IL
authorized to issue $50, 900, 000 or 10
per cent cumulative preferred STOCK
and 500, 100000 of common stoch.
but only about two-flfths OF the !atlef
had been issued. The amount OF
each class of securities at
the end Of 1906 was:
Common stock ......... $4O,2f1,4oo
Preferred stock, 6 per cent
cumulative. =. ...... fo,oo0'Aoo
Six per cent gold bonds,
due 1944 ......... oo,1oo'o'o
-Four per cent gold bonds,
due 1851 $500. aol,ooS,ioo
Tota, ......S235,191,95
aWinciuding s5,o1o,5Oo of CONSOLE
dated Tobacco Company bonds as
sumed by the American Tobacco Com
Reasons for the Policy Of Stock Own
erShip.
The extent to which the Tobacco
Combination has maintalned its con
troll through stock ownership IN SUB
sidiary companies, instead Of through
direct ownership Of all plants and
other assets, shows that ais method
Of control must possess certain special
advantages. This policy Of stock
ownership has been particularly CON
s%picuous since 1899.
When this policy of stock acQuisi-
ton was first inaugurated, it was the
, more common practice Of the Combin
, alton to acquire only a controlling in
terest in the securities OF other cor
$ porations, leaving a minority in the
hands Of the former owners. This
practice had various apparent advan-
ages. Through it the Combination
e was able to acquire control over bust
t ness without a correspOndingly great
investment Of capital. In some in
stances it secured stock interests in
concerns engaged in c~OntributOry en-
: terprises h investment Of CAPT
e tai, but merely in return for contracts
for the supply Of materials Or serv-
f ices to the Combination. In numer-
: Gus cases it appeared advantageous tO
t leave a minority of the stock in the
s hands Of the original owners in order
y to retain their interest and Skill and
n to take advantage of their personal
e following among customers. In some
n cases, moreover, owners OF enterprises
were unwilling to sell out absolutely
n with the consequent result Of having
either to quit the business or become
mere salaried employees, but were
willing to transfer q controlling inter.
est to the Combination. Even at this
/ time, however, the Combination ac'
quired the entire capital stock of Ger
tain corporations and retained thell
l. separate existence. and ~ecently thi:
has been it's prevalent practice. The
Combination has, in fact. during tn
a past few years, acquired the remaining
shares in a considerable number o
IS companies in which it at first hal'
% only a controlling interest. Variou
IS reasons have led the Combination t.
y continue the separate corporate ex
4 lstence of many of the concerns which
~ 1T thus completely owned. Asid
L from advantages arising from lega
considerations-the avoidance Of tn
Z necessity of making reports OF tn
business Of the parent corporation. II
lie compliance With~the laws Of certail
States, economy with respect to cor
I poration fees and taxes, and the like
er tho continued o-;o-ao q ,,,oL ron