Evening star., 1909-06-06
MILLIONS IN PROFITS
Details of Tobacco Industry
Shown in Report
BY COMMISSIONER SMITH
Response to Resolution by Senator
Beveridge.
TAX AND EARNINGS COMPARED
Trust Controls Substantially Three
Fourths Of the Business Of Manu-
featuring Other Than Cigars.

Responding to a resolution introduced
In the Senate by Mr.. Beveridge. an ex-
1austive report made by the bureau Of
corporations Of Information collected af-
fecting the price Of tobacco was sent to
the Senate yesterday by President Taft.
Much of the information covers the mat
ter heretofore made public by Commits
sioner Herbert Knox Smith.
| 1t is stated that the bureau has In prep
aration complete report covering the
subject Of the prices Of tobacco and the
operations of corporations, the informa-
| ton for which was secured In accordance
with the law creating the bureau The
more important material, showing in sub
stance the results of the investigation, is
included In a preliminary report.
| Commissioner Smith says that any con-
sideration of the subject Of the tobacco
| industry during recent years Is neces-
sarily largely consideration Of the rela-
tions of the tobacco combination, which
controls substantially three-fourths of the
| business of manufacturing tobacco, other
than cigars, in the United States. To
show the extent of this business 1t is
stated that the output of the independent
concerns, excluding cigars, now amounts
to $35,OOOOOO per year.
Ready Access to Books.
According to the report the American
Tobacco Company and other companies
in the combination have given the bureau
full and ready access to their books and
records. From comments made upon the
manner of keeping books it appears that
the bureau had less valuable information
| concerning the conduct of business by in
dividual concerns.
| Tables are included in the report show
| ing the remarkable increase of profits to
| the concerns in tie tobacco combina ton
| from 1890 to 1907, inclusive. The bureau
says 1t Is not prepared at the present
time to report in detail on the subject of
overcapitalization or on the cash value
of the good will acquired from time to
time by the combination.
| 1t is asserted, however. that the value
of good will, which means value Of
| brands of goods manufactured by con-
Germs which were swallowed up by the
combination. could not have exceeded a
comparatively small fraction of the value
assigned to it on the books of the COM
| binaton.
The only reason why the American To-
| oacco Company, In its early years, was
| able to earn liberal dividends on it's entire
capitalization, the report says, lay in its
monopoly power. After reviewing capital
ization and earnings Of the combination,
| the report says:
/ 1T is evident, therefore, from these
facts that no comparison of any signifi-
| canoe can be made between the ne earn
ings of the tobacco combination and it's
capitalization or it's reported assets
Tax Paid by Companies.
] Among the most interesting subjects
taken up by Commissioner Smith is the
amount of tax paid by the companies in
| the tobacco combination to the federal
government In comparison with the profits
made by the combination. The report
| says that the maximum amount of taxes
| paid, might be expected, was during
the years 1899 and 1901, when the war
revenue taxes were in force. The amount
| of tax collected fell off greatly in 1902 and
1903.
The cost Of the output of the concerns
in the tobacco combination shows broad
ly speaking, a steady increase since 1899,
corresponding to the increased volume
of output said the commissioner. Very
striking, however, are the change in
profits. and particularly when the profits
are compared with the taxes paid. AS the
amount of tax fell off the amount of
profits increased. From 1899 to 1903 the
taxes fell off about SS,oOO0uO, while the
profits increased about $l3,6Oo.O0, rising
from $5.122,971 in 1899 to SIS. 735, $50 in
1903. The profits fell off somewhat in
1904, but again increased. reaching a
| maximum in 1906, $2O,64l, 7OS.