Arizona republican. [volume] (Phoenix, Ariz.) 1890-1930, 1915-05-10
Supreme Courts Dissolu-
ton Order Results in
Competition by Success
sors, But Has Not At
fected Prices
BUT PROFITS
ARE REDUCED
This is Conclusion in Re
port of Old Bureau Of
Corporations NJ erge d
With the Federal Trade
Commission
ASSOCIATED PRESS DIsPATcH1


WASHINGTON. May 9.-The su-
preme courts dissolution of the To-
bacco trust has resulted in competi-
ton between the successor companies,
in most branches of the industry. but
has not affected wholesale or retail
prices. and in general such competi-
ton has reduced the profits of the
other companies
That is the conclusion of the old
Bureau of Corporations, now merged
with the Federal Trade Commission.
in the third portion of its report on
the tobacco industry laid today be
fore President Wilson.
Extensive. and largely technical. the
report deals with the prices, costs
and profits of the seven companies
into which the federal courts divided
the American Tobacco company in
1911 after the celebrated dissolution
decree
The extent Of competition between
the seven companies is discussed in
sofar as the facts regarding prices,
costs and profits and changes in
volume and division of business tend
to show il, but not with regard to
other important factors because the
courts retained jurisdiction Of the
case and the Department of Justice
is making its own Investigations into
the manner in which the dissolution
decree is being observed. It points
out. however. that the seven COM
panies thus created. We're in their re
spective branches. much larger than
any companies not connected with
the combination"
For particular brands" says the
ba 10 inhiaarS
nor to consumers show important
changes following the dissolution of
the combination. Such competition as
has developed among the successor
companies did not result in price cut
ting
Costs of manufacture since the dis
solution were found distinctly higher
because of duplication of effort, and
chiefly. to advertising. Where the
advertising bill for the big combina
ton was about $11.000.00 in 1911. the
seven successor companies spent more
than S23. 500. 900 in 1913. While there
was an increase in the volume of
business the ratio of advertising eX
pense to sales doubled between 1910
and 1913 The aggregate profits of the
successor companies in 1913 were
s29, 1875 95S or about s1.230.000 less than
the profits of the combination in 1910.
on the basis of an investment of ap-
proximately $3.50 100000.
In view of such high rate of
profit" says the report, the ques-
ton naturally arises: Why has there
been no competition? The answer
to this question is partly found in
the peculiar price making conditions
in the tobacco trade"
Sizes of tobacco packages, the re-
port points out are affected by law
and it suggests that price competi-
ton might be facilitated by amend
ing the law to establish a larger num-
Der of sizes of tobacco packages with
smaller difference between them or
providing that all kinds of tobacco
may be packed and stamped in
wholesale quantities.
of the so-called Independent COM
panies operating apart from the sew
en- successors to the trust the report
says few of them have shown in
creased prosperity since the dissolu-
tion.
Compared with either the COM
it says they have. on the
whole, made an exceedingly poor
showing of profits and since the dis
solution this has been especially
marked in navy plug and Turkish
On the other hand in long
cut smoking they have done much
better since the dissolution. In scrap
tobacco alone their profits have been