Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1915-05-10

Washington. May 9-The supreme
courts dissolution of the Tobacco
Trust has resulted in competition be-
| tween the successor companies, in
most branches of the industry, but
has not affected wholesale or retail
prices. and in general such COMPETE
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 it's 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
| so far as the facts regarding prices,
costs and profits and changes in vol
ume and division of business tend to
show it, but not with regard to other
important factors because the courts
retained jurisdiction of the case and
the Department of Justice is makir;s
it's own Investigations into the man.
ner in which the dissolution decree IS
being observed. 1t points out, how
ever that the seven companies thus
created, were in their respective
branches, much larger than any COM
panies not connected with the Com
bination."
| For particular brands" says the
| report, neither the prices to jobbers
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 s11,OOo,O0O In 1911, the
seven successor companies spent
more than $23 100000 in 1918. While
there was an increase in the volume
| of business the ratio Of advertising
expense to sales doubled between 1910
and 1913. The aggregate profits Of
the successor companies In 1918 We're
$29, 1888 or about $1,230,000 less
than the profits of the combination in
1910, on the basis of an investment of
approximately s25O0o00O0
In view Of such a high rate OF
nrOfSf - hn tbo
naturally arises Why has there
been no competition in prices? 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 competition
might be facilitated by amending the
law to establish a larger number Of
sizes of tobacco packages with small
er difference between them or pro-
viding that all kinds of tobacco NAV
be packed and stamped in wholesale
quantities.
OF the so-called Independent COM
panies. operating apart from the
seven successors to the Trust. the
report says few of them have shown
increased prosperity since the dissolu-
ton.
Compared with either the COM
bination or the successor companies, >.
It says, they have. on the whole.
made an exceedingly poor showing Of
profits and since the dissolution this
mas been especially marked in navy
plug and Turkish cigarettes. On the
otner hand In long cut smoking they
nave done much better since the dis
soiution. In scrap tobacco alone
tneH profits have been greater than