The Climax-Madisonian. (Richmond, Madison County, Ky.) 1914-1917, 1915-10-20


We find that $4,000 worth of to.
bacco was distributed for legitimate
advertising purposes, but there is alb.
solutely no truth in the charge that it
was fraudulently given away.
We find that the sum of $500, 900 was
expended for certain brands and good
will, and that these are not imaginary
assets, and if this factory continues in
operation it is our judgment that these
brands and good will are proving a
profitable investment.
TX.
1t is charged that during the year 1912
and the early part of the year 1913. the
officers of the Company for the purpose
of depicting its assets placed incompe-
tent agents on the Lexington, Louisville
and Cincinnati markets and caused them
to purchase 400 hogsheads of tobacco
which the Company could not use and
for which it had no use; that in the win
ter of the years 1912 and 1913. 1900 hogs
heads of tobacco were purchased in ad-
dition to the above 400, and the Com
pany paid therefor eighteen cents per
pound; That 100 hogsheads was sufficient
for the Company's needs; that the pur
chase was reckless and fraudulent and
done for the purpose of depicting the
Company's assets; that the officers of the
Company afterwards. during the summer
of 1914, sold practically all OF this tobac-
CO at a loss of one-third of the original
cost, and the amount realized from the
sale was used to prefer certain creditors
whom the President and members of the
Executive fo IA
1t is also charged that this tobacco was
sold to the American Tobacco Company,
w. L. Petty Company and r. J. Reynolds
Tobacco Company for the fraudulent pur-
pose of favoring these corporations. two
Of which were formerly identified with
the Trust
We have carefully investigated the
facts concerning the purchase of this
tobacco. The tobacco crop grown dur.
ing the season of 1912 and sold during
the market season of 1912 and 1913
was an unusually fine crop and con.
tanned an unusual amount of high.
grade tobacco which was especially
suited for the use of the Company in
manufacturing its brand of City Club
The managers of the Company antici
pated a rapidly increasing demand for
this brand and believed it was the part
of good business to purchase liberal
quantity of the higher grades of tobac
co sold on the market during that sea.
son. This tobacco was for the most
part purchased late in the season and
after March 1, 1913, the buying for the
hn1 nff hot
These same grades of tobacco had sold
earlier in the season from five to ter
cents per pound higher than the Bur
ley Tobacco Company paid for it, and
these higher prices were paid by the
large manufacturing companies some
of which were formerly members OF
the Tobacco Trust The purchase Of
this tobacco was regarded by the Off
GERS of your Company as wise, and We
find that the tobaccos which were pur
chased were fully worth the price:
paid at that time.
While it is impossible to measure il
dollars and cents the damage to the
Company's business growing out of the
receivership suits filed in Coyington il
| 1912, we think it is undoubtedly true
that, these suits greatly injured the
business of the Company and affected
its sale of manufactured brands of to
bacco. The output of the factory die
not fulfill the expectations of the Com
pany's officers. but this failure was il
our opinion due in large part to the
| dissensions within the Company anC
the suits above mentioned and also Il
| the depressed commercial condition
which has prevailed everywhere il
| this country for several years. AS the
Company was carrying large indebt
edness which was owing to variou.
banking institutions, and these institu
tions were pressing the Company fol
payment, the Executive COMMITTEES
was compelled to sell large portion
of this tobacco. The tobacco was sole
at the best price obtainable and at it.
full market value, and any loss which
| was incurred on this tobacco was due
to the fact that the prices of tobacco
had considerably dropped since it wa.
purchased. The loss to the Compan,
from this source. including interest OIL
borrowedsmoney and carrying charges
amounted to $4,000.
We do not believe that your officer
should be criticised for this loss. I
must be remembered that the purehas
of this tobacco by the Burnley Tobacc'
Company helped to maintain the bette
prices to the grower. and this tobacc'
itself was bought directly from TIN
grower. who received the benefit o
the purchase.
1t is charged that q. G. Saunders
member Of the Executive Committee. pur
chased in 1912. 100000 pounds Of tobacc
/ in his own name and sold the same t