The Washington herald., 1911-09-25
The Tobacco Trust.

The report upon the inquiry INTO the
operations and profits OF the American
Tobacco Company, otherwise known as
the tobacco trust, which has been made
public by tie Bureau Of Corporations, is
full Of interesting facts. 1t Is shown,
first Of all. that where the corpora
tion enjoyed monopollstic control-as
in the manufacture OF smoking to-
bacco and snuff-the earnings were
enormous. They increased from u per
cent in 1000 to $ per cent in 1903,
with even higher dividends in the snuff
business InaSmuch as the trust has
never succeeded i'll securing a monopoly
OF the cigar or fiat plug trade, its earn
ings in those branches have only aver
aged between and Q per cent.
Nothing could better illustrate the
value OF trust combination than these
figures. II is worth while to note, also.
that the trust was able to capitalize this
monopolistic power Thus, when the
trust was formed. in 1890, its tangible
assets amounted 10 less than S5,OOO,OOo.
although il arbitrarily added more than
100000 under the head OF good will.
In later years. alter new combinations
had been formed, the capitalization had
reached SIo2oooooo, although the tan
gible assets were less than half that sum.
In fact, the main arraignment of the
trust IS one of excessive Overcapitaliza-
ton 1t was enabled, through the cx-
ercise Of what the government officials
characterize as monopolistic power, to
earn, in 1903, almost 20 per cent upon
its inflated stock, or % per cent upon
the tangible assets. All through the re-
port the fact is emphasized that con-
centratcd control is the one essential to
the building up OF enormous profits.
But there is another phase of the Sit
uation which will appeal directly to the
public mind When it became neceS-
sary for the government, in 1898, to
provide for the cost OF the war with
Spain by the imposition of higher taxes,
the internal revenue tax upon manufac-
tured tobacco was raised from to I2I
cents per pound Prices were there
upon increased in proportion In 1902,
however, the tax was reduced to its for
mcr basis. but" says the report. the
combination was powerful enough to
keep its prices on the higher level. 1t
thus absorbed practically all the bene-
fits of the reduction. adding millions
yearly to its income This episode shows
the unforeseen results OF fiscal legisla-
tion affecting monopoliStic conditions not
fully recognized. The tax reduction. of
course, was intended to benefit the con-
sumner. As 4 matter OF fact, it bene-
fitted almost solely the controlling in
terest in the industry"
Nothing could better Illustrate the
great financial value OF monopoly such |
as the tobacco trust than the, above
quotation from the governmental report |
1t demonstrates. also, why the great |
business combinations deem it of such !
to dominate legislation, Even |
when Congress enacts measures appar-
emily of public good, the bencfcent pur-
poses of the laws are perverted so as
to inure solely the financial advantage
of those who control the output of the
product This condition applies also to
the tariff, and is undoubtedly responsible
for the spirit of protest which is abroad
in the land
The fact that Pastor Russell can in