Daily press. [volume] (Newport News, Va.) 1896-current, 1909-02-19

| wear 1901 10 l"r% however. it g."atiN
! incr, lsd rs ,v'Uut. ,houeh only at
| the expense OF heavy loses due -
! ,Xtravagant ADVERTISING and scheme 5
| and deals in ".Hln, elton win IN"
| American ami { II mental companies
| In 1909 il had .houl onr-SiNth q! the
| cigar out.ul OF IA" lnitrd Stars.
The new calltdl madr avLilan."
! BY the G nsoid,tl Il Tt,a:ro Com
| pary. which Wa "IGaniZ"d y II ai'"r
the American Clear Company. was IN
part used in thi~ expansion OF th'
cigar business.
Consolidated Tobacco Company. 1901.
TIL" COnsolih ,',d Tobacco Gem
pany. organized in juno. 1901 Ssill
further cementeL III" union between
the two prime al combinations -
the Am. rican and Continental &, III,
panics-by acluirim& nearly ihr en-,
tire amt unt OF the cummCa ,"k
of both The CnnsuiidatrI ais CAV"
still m~re Complete control to the
few men who wrr" already tn" Lead
els III l1' 49, NV 'iifl saw
them the surplus profits OF the bust
res. An immediate nbjrc'. however.
was 10 secure additional Capi'al f"~
the cxDansiCn IF the business OF iii"
Combination. particularly il I'll" cigar
industry and in foreign countries.
The Consolidated Tobacco Com
pany had at the outset capital
stock OF $30.00N0un. which was pa!
in in cash: this was Increased 10
$40 .nr 1000 a; the end OF 100 m
medid;cly after its ~rganzalipr III"
Consolidated issued circular. civ
inI the names OF lis directors Nh'
were mostly men ai,rady in n Ill
rectorates OF the other two cCmpaA-
les. and Offering 10 exchange its
per cent bonds In equal amounts FOR
he common stock OF the Continental
Tobacco Company. and to eXchang"
them at the rate OF $500 for 800 FOR
the common stock CT the American
Tobacco Company. The Offer was
promptly accepted by nearly all the
81 ckhclders. Ultimately the amount
o: bonds issued by the CONSOLIDATE
ed for this purpose became $l'1.-
,7S.oou, for which $54,274,3,o 81
American and $4S,S2s.ltA of C~n'i-
mental common stock We're acquired.
The exchange OF double amount
of bonds FIR the American Tobacco
Company stock meant. of course,
still larger overcapitalization as con-
pared with the actual investment.
The owners OF the stock Of the
Consolidated thus acquired efectlv"
control of both he American ard IN"
Continental. and became entitled toI
all the Profits OF both in excess or
the fixed am UNITS required for divl-
bends on their preferred stocks AL
for interests on the CONSOLIDATED
bends This exchange Gf sock '"'
bonds had appeared at the time hIsi-
Nv advantageous 10 the common STOCK
holders of the American ami Cen
tinental companies. The Continent u
common stock had never paid a div
dend. AMI during much # the i'm"
had solo a! between $50 and So" %
800 share: the holders Were H. "
guaranteed per cent on III" pa:
value. The American Tobacco C1m
any's cOmnlH stock, since the dc
claratfon o: the 100 per cent strti
dividend in 1899. had paid ally q
per cent. and the exchange was
equivalent 10 guarantee Of S pr!
cent. TIL" actual earnings on 80"
company were about = per cent.
Nevertheless the transaction
actually pr.vei enormously ErOhtaD'
to the men VINO organized the Ton
solidated Tobacco Company. Those
men had been tor the most part N
tn. dlrpCto, OF he American aid
Contin. ntal companies. and they wsr"
in far better position thai m /
,utside Stockholders to form co..
let judgmcE rs ID the pr-Oa1e
lea: incrcas" in profits that wns
likely to occur in the near f"tur"
The probability of such an increase
in profits lay in the changes in T."
internal-revenuC taxes on to3acc. pro-
ducts. Those Ia>es mad been greatly
increased in l>4>. to provide tuEfS
for the Spanish war. Already. 90
fore the organization e the C@n>oli-
dated. Congress had passed. an act
10 reduce the tax on manufactured
tobacco ii p chewing and smoking
T. baccob and snuff from - cents 20
90 cents pr i"und and that IN
cigarettes from $50 TO sloS yer
Thousand 80 ce.ts for Ch"aP
gradesp. This -'ductIOn was 10 az"
| eject on July ! 1901. or fsv
weeks after H.. Consolidated was es-
tablished. Pr >Tmably. also. iii" d.
rectors e.. in 'rnccrn iorcsaw ths
! the AZ on maIul iCturei Tobacco AMI
sniff " uId p,' ~:ili further Tciuc"I
la or. 10 hriT. " hack To IN" pas's