Show METHODS OF THE TOBACCO TRUST Commissioner of Corporations Gives Inside History of the Organization Feb IS In a report trans transmitted transmitted milted to President Roosevelt noo elt today Her Iier Herbert bert Knox Smith commissioner of cor corporations corporations corporations presents some highly interest interesting InterestIng Interesting ing history of the organization of the tobacco combination which in the magnitude of its business operations is isone Isone isone one of the greatest organizations in Amerl AmerI Amer l I ti a The report is a result in part of an extensive investigation Into the to toco tocco cco co industry made by the bureau of Subsequent reports will deal TV with the control of the tobacco in industry industry industry with prices and profits and with ith 3 competitive methods Today s report sets forth the tile rise of one of the great combinations of the coun country try In his letter of transmittal Com Commissioner Commissioner Commissioner missioner Smith says that th t It deals with the history from the standpoint of its organization of the great tobacco com combination combination Starting In 1835 1895 as the Ameri American can Tobacco company a manufacturer of cigarettes with a capital of ot 0 0 the combination has now a net capi capt capitalization capitalization excluding hold holdings ings of It has absorbed about F o separate concerns and now controls substantially of the output of reach sen Important kind of tobacco manu manufactured manufactured in the tho United States with the tile exception of ot cigars Stock Manipulation Its history also presents important features fea tea features tures of stock manipulation The finan financial financial financial cial transactions centering around the or organization of the Consolidated Tobacco company in 1901 are especially noteworthy At that time a small body bod of ot directors and stockholders In tho the combination be believed beI believed ted I that tho the profits of the combination tion could be greatly Increased In the tho Im lm Immediate Immediate mediate future They organized the Con Consolidated Consolidated Tobacco company and offered its bonds in exchange for the common stock of the American and the Continental tal In order thus to secure for tor them themselves themselves selves most of the increased prof profits about to accrue The Tho profits accruing to the common stock Block of the American and the Continental after its acquisition by the Consolidated increased greatly and the small body of men controlling tho the last named Tt company so smalL smaiL In fact that FIX six of them held a majority majo t of Its Ils stock nd md thus controlled the I tion became entitled to millions of dol lars which had it not been for the Con Consolidated ConI I transaction would have gone j Ito to the original holders Daylight Robbery Commissioner Smith says pays that in fairness fair fairness ness it should be added that this offer of exchange was made with no conceal concealment concealment concealment ment of the fact that that offer came from the principal officers and directors of the two companies but he adds The conduct of this group of men Is Isa i ia isa a proper subject for criticism however because they the could foresee much better than outside stockholders the large profits about to Scenic They The occupied a fiduciary fiduciary ary relation to the outside stockholders and should have shared with thorn them equal I ly the thc special knowledge acquired by their position The Tho report discusses at length the methods by b which the tobacco tion has been developed including the bogus independent concerns of the com coni It H points out clearly clearl that the leading purpose of trie men who have hae controlled It has leas been to dominate the tobacco industry J The report contains not only the details of the financial opera of the combination In its rise but also many Interesting sidelights on the schemes employed ed to make the tion paramount in the tobacco Industry |