Evening star., 1909-02-25
TEN men IN CONTROL
Commissioner Smiths Report
on Tobacco Trust.
VAST CAPITAL INVOLVED
Over $3l6.0Oo,oo0 Represented in
the Combine.
SMALL CONCERNS DRIVEN OUT
Astonishing Growth Shown by Pur-
chase of Competitors-Controls
Foreign Trade.
SMALL CONCERNS DRIVEN OUT

Herbert Knox Smith. commissioner of
corporations. today made public sub
divisions III and III of part ! OF his re-
port on the tobacco industry. They deal
with the present organization of the to-
bacco combination. so-called: its degree of
control in that industry, and the develop
ment of that control
These divisions of the report, resulting
from a thorough investigation into the
business operations Of the tobacco COM
bination, contain an elaborate discus
sion Of the methods by which the manu-
facture of tobacco, except cigars, have
come under the control of comparatively
few capitalists. Commissioner Smith
says:
In the tobacco combination are the
American Tobacco Company and it's three
great subsidiary combinations. the Ameri-
can Snuff Company, the American Cigar
Company and the Britsh-American Com
pany, besides 81 other subsidiary concerns
doing business i'm the United States, Porto
Rico and Cuba The combination repre-
sents a total net capitalization of over
$;16O0O,OOO. A very small group Of ten
stockholders control 80 per cent of the
outstanding voting stock of the American
Tobacco Company. through which COM
pany the entire combination is control
led
Only important Exporter.
list of the subsidiary companies con-
trolled. including over twenty hitherto
secretly controlled. so-called bogus in,
dependent concerns - is given in the re-
port. 1t is shown also that the COM
bination is practically the only impor-
tant exporter of tobacco manufactures
from this country.
Astonishing figures are given in respect
to the development of the combination.
In 1891 it controlled 50 per cent of
the business of cigarette manufacture,
and this proportion is practically main
tanned today. In cigars its output in
creased from 4 per cent of the business
in 1897 TO IA t-1O per cent in 1906; while
in manufactured tobacco (chewing. smok-
ing, fine cut and snun) ''the cOmbina-
tion's output increased from per cent of
the total in 1891 to - per cent in 1905.
Finally, in 1905, the combination con-
trolled of these separate products. respec-
lively. plug, 81 per cent: smoking, Il
per cent; fine cut, 81 per cent. and snuff.
?6 per cent In the year 1905 the COM
bination used in the manufacture of it's
various products nearly 3oo,OO0,OOO pounds
OF leaf tobacco.
An idea of the absorption of competing
plants" says Commissioner Smith. land
of the changes through combination with
i'm the last decade may be had from the
fact that In 1887 the combination had ten
plants. each producing over $1,000 pounds
of manufactured tobacco or snuff per
year. while there were 243 independent
plants of the same class. In 1905. on the
other hand. the combination had As plants
of this class and Independent manufac-
turers 14e. Especially conspicuous has
been the absorption of the large plants.
In 1897 the combination had s plants, |
each producing over 100000 pounds of
these products per year, while its competi |
tors had AZ such plants. In 1905 the COM
bination had 34 plants of this size and in !
dependent concerns only IL.
Weaker Concerns Driven Out.
Despite the combinations enormous |
expenditures for advertising and in |
schemes and despite frequent price cut
ring by means of its so-cailed fighting |
brands there has been in several |
branches of the industry constant ten |
dency for competitors to gain business
more rapidly than the combination and |
thus To reduce its proportion of the out
put. This tendency has been overcome |
only by continued buying up of competi- |
tive concerns.
Many weaker concerns have been vir- |
tualy driven out of business or forced to |
sell out to the combination, either by rea- |
son of the direct competition of the lat |
ter or as an indirect result of the Wig |
oIous competition between the combina- |
ton and larger independent concerns. In |
the case of the larger and more powerful |
concerns which ii acquired. however. the |
combination has usually secured control |
only by paying high price. The i'm |
mense profits of the combination have en-
abled il to keep up this policy.