bined. Although this is a minority of the stock, the American Snuff Company is as essentially a part of the one great Tobacco combination as the American Tobacco Company itself.

The American Snuff Company has closed up most of the plants which from time to time it has acquired from formerly independent concerns. In 1906 it operated directly four plants and controlled six subsidiary companies; the latter, however, were virtually little more than branches, the entire stock of each being held by the parent company. The directly owned plants produced over three fifths of the output controlled by the combination and the subsidiary companies all of the remainder, except 24,391 pounds made on royalty by the Irby branch of the American Tobacco Company. The directly owned plants are, in the order of their importance, the Helmetta (New Jersey) branch, the Baltimore branch, the Nashville branch, and the Clarksville (Tenn.) branch. The most important subsidiary companies in 1906 were W. E. Garrett & Sons, of Yorklyn, Del., and Weyman & Bro., of Chicago. These companies have since transferred their property directly to the American Snuff Company. W. E. Garrett & Sons in 1906 produced more snuff than any branch directly owned by the American Snuff Company except that at Helmetta, N. J. The next largest of the subsidiary concerns is the Standard Snuff Company, of Nashville; the others- the De Voe Snuff Company, Skinner & Co., and H. Bolander (Incorporated) — are very small concerns.

THE CIGAR GROUP

The business of the American Cigar Company and its subsidiary manufacturing concerns in the United States is exclusively the production of cigars, including cheroots and stogies. In Cuba and Porto Rico this group of companies makes both cigars and cigarettes.

The American Cigar Company has outstanding $10,000,000 of preferred stock, $10,000,000 of common stock, and $10,000,000 of ten-year gold notes. The American Tobacco Company holds $8,970,000 of the preferred stock (besides $500,000 held by the American Snuff Company) and $7,725,100 of the common stock.

The output of plants operated directly by the American Cigar Company is confined almost exclusively to ordinary cigars made from domestic leaf and to cheroots. It had 29 plants in operation in 1906, and their aggregate output was about five times as great as the output of cigars by all its subsidiary companies operating in the United States. Most of these 29 plants have been acquired from formerly independent concerns, and many others so acquired have been closed. The two plants at Jersey City and Richmond are the largest in the country, making about 190 million cigars each in 1906.

The American Cigar Company holds the entire capital stock of the Havana-American Company, which is the most important manufacturer of cigars made from Cuban leaf in the United States. This company operates 10 factories, most of them at Key West and Tampa, Fla. The American Cigar Company also holds about three fifths of the stock of the American Stogie Company, a heavily overcapitalized combination of stogie manufacturers (common stock $10,879,000, preferred $976,000). This is a New Jersey corporation, but most of its business has been carried on through a subsidiary Pennsylvania company of the same name (changed in 1907 to Union American Cigar Company), which has recently announced its intention of manufacturing ordinary cigars as well as stogies.

The American Cigar Company controls its important business of manufacturing cigars and cigarettes in Cuba through the Havana Tobacco Company, a greatly overcapitalized concern (common stock $30,000,000, preferred $5,000,000, bonds $7,500,000), nearly half of whose stock is held by the American Cigar Company. This company controls several others - Henry Clay and Bock & Co., Havana Cigar and Tobacco Factories, Havana Commercial Company, H. de Cabañas y Carbajal, and J. S. Murias y Ca.—which together have a considerable proportion of the manufacture of cigars and cigarettes in Cuba.

The American Cigar Company further controls, jointly with the American Tobacco Company, the Porto Rican-American Tobacco Company (capital stock $1,999,000, scrip $72,538), which is much the largest manufacturer of cigars and cigarettes in Porto Rico. It is likewise interested either directly or indi

rectly in several companies which grow or handle tobacco leaf in Cuba and Porto Rico.

The American Cigar Company has also controlling stock interests in a dozen or more wholesale or retail distributing companies, most of which handle other tobacco products as well as cigars.

BRITISH-AMERICAN TOBACCO COMPANY

The British-American Tobacco Company, which is the representative of the Tobacco Combination in export and foreign trade, is an English corporation. It has outstanding $7,290,000 of preferred stock and $18,079,302 of common stock. The American Tobacco Company holds substantially two thirds of each class, namely, $4,860,000 of preferred and $11,897,255 of common. Practically all the rest of the stock is held by the Imperial Tobacco Company, the great British combination.

The principal business of the British-American Tobacco Company in the United States is the purchase and preparation of leaf tobacco for shipment to its affiliated concerns abroad, and the manufacture of cigarettes for export. Its cigarette manufacture is chiefly conducted in one plant at Durham, N. C., but it has also a cigarette plant at Petersburg, Va. The company also controls three subsidiary concerns doing business in the United States.

DEVELOPMENT OF THE COMBINATION'S CONTROL OF THE TOBACCO INDUSTRY

THE COMBINATION'S PROPORTION OF THE BUSINESS, 1906 The Tobacco Combination, including the American Tobacco Company and the affiliated combinations and subsidiary companies, occupies a strikingly dominant position in the manufac ture of all forms of tobacco, except cigars, in the United States. The table on the opposite page shows its proportion of the output during 1906.

While the Combination manufactures less than one sixth of the cigars made in the United States, it has substantially four fifths of the combined business in other classes of the tobacco

THE COMBINATION'S PROPORTION OF THE OUTPUT OF TOBACCO PRODUCTS, 1906.

products, its proportion ranging from 70.6 per cent of the total output in the case of smoking tobacco to 96 per cent in the case of snuff. Combining those products which are measured in pounds - namely, chewing tobacco, smoking tobacco, fine-cut tobacco, and snuff the Combination's proportion of the output is 77.6 per cent. The Combination has, therefore, very strong monopo. listic power.

With the exception of cigarettes, very nearly the entire quantity of manufactured tobacco products made in the United States is consumed there, so that the Combination's proportion of the domestic trade in these products corresponds substantially to its proportion of the entire output. In the case of cigarettes approximately one third of the number made is exported. The Combination has practically the entire export trade, from which it follows that its proportion of the production for domestic consumption is somewhat less than appears in the above table, being 74.5 per cent in 1906.

CONCLUSION

These facts [Ten pages of detail omitted.] emphasize the conclusion already drawn from the history of the organization of the Tobacco Combination, that its primary object has been to

secure a dominant position in the tobacco business of the United States with the result that it has a nearly complete control of it, save only in the manufacture of cigars.

The combination has superior advantages over competitors, from the great size of its plants and from the control of more efficient machinery. These advantages, however, have not been sufficient to enable it, while charging high prices for the greater part of its product, to increase its degree of control, particularly in view of the fact that many consumers prefer to patronize independent concerns. Despite enormous expenditures for advertising and in "schemes" and despite frequent price cutting by means of its so-called "fighting brands" and its bogus independent concerns, there has been, in several branches of the industry, a constant tendency for competitors to gain business more rapidly than the combination and thus to reduce its proportion of the output. This tendency has been overcome only by continued buying up of competitive concerns. Many weaker concerns have been virtually driven out of business or forced to sell out to the combination, either by reason of the direct competition of the latter, or as an indirect result of the vigorous competition between the combination and larger independent concerns. In the case of the larger and more powerful concerns which it acquired, however, the combination has usually secured control only by paying a high price. The immense profits of the combination have enabled it to keep up this policy.

HISTORY OF THE FOREIGN INTERESTS OF THE TOBACCO

COMBINATION1

EARLY HISTORY

From the time of the original formation of the American Tobacco Company in 1890 it had a considerable foreign business. For a few years this business consisted chiefly of cigarettes, and was handled directly by the American Tobacco Company itself. As early as 1894, however, several subsidiary

1 Report U. S. Bureau of Corporations, on the Tobacco Industry, vol. I, Feb. 15, 1909, pp. 165-176.