Red Sun - Is it really a Louisiana exclusive?

[BobC]

Originally Posted by Pat R

I guess that I was the only one that was fascinated that the American Tobacco Company controlled 96% of the cigarette output in the world in 1910.

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Not at all the only one Pat. That is astounding that they were in control of that much of the domestic cigarette market. What does surprise me is that there had not been a run up in prices. Where else were people going to get their cigarettes/tobacco otherwise?

[steve B]

Originally Posted by BobC

Not at all the only one Pat. That is astounding that they were in control of that much of the domestic cigarette market. What does surprise me is that there had not been a run up in prices. Where else were people going to get their cigarettes/tobacco otherwise?

The illusion of competition, which may have kept them out of trouble for a while.

Plus, with so many different brands they could have different pricing tiers for what was actually the same product.

I would think that what was produced at say factory 30 was the same stuff in different paper tubes.


That's still done today. A friend worked on controls at a plant making vodka. They did 6 different brands, all from the same machine. Monday- Premium brand, Tuesday to Friday different brand each day less premium each day. Saturday, rotgut until the charcoal filters finally gave out. Sunday change the charcoal...

[BobC]

Originally Posted by steve B

The illusion of competition, which may have kept them out of trouble for a while.

Plus, with so many different brands they could have different pricing tiers for what was actually the same product.

I would think that what was produced at say factory 30 was the same stuff in different paper tubes.


That's still done today. A friend worked on controls at a plant making vodka. They did 6 different brands, all from the same machine. Monday- Premium brand, Tuesday to Friday different brand each day less premium each day. Saturday, rotgut until the charcoal filters finally gave out. Sunday change the charcoal...

That is a good point Steve, and well aware that that is still done today.

[cfc1909]

I find it interesting that T210 Series 6, 1, or 2 for example don't have any Fat Border cards

Series 2 T210 Old Mill Fat Border

[Brian Weisner]

Hey Jimmy,
Great card….. I always think of you when I see a Revelle…




Hope you and the family are well. B

[G1911]

From the surviving records, it seems the ATC was largely still operating on a low-cost methodology when Uncle Sam broke them up. Considering they owned or controlled over 90% of the market and high percentages of the market for components of tobacco products, distribution channels etc., it seems a little strange perhaps just how obsessed they were with that last 5-10% of the market out of their control. Their price cutting to drive out and make impossible the success of small companies probably wasn't creating more net profit at the end of the day than just leaving them be and selling some product a little bit higher would have.

They openly own a lot, and many other things are difficult to discern if the company is 1) technically independent and bullied by the ATC into doing what it wants or 2) a clandestine subsidiary kept off the books precisely because of the new anti-trust laws and the vagueness of enforcement in the early 20th century. Knapp's ALC seems to make extensive use of method 2 and less bullying, but the ATC seems to do both quite a bit.

[G1911]

In the course of sorting out some points and putting together a proper account of T226 and its history, I found further evidence about Red Sun's absorption into the ATC and the Universal Tobacco Company that was discussed in this thread. We suspected earlier in this thread that Universal may have been part of the ATC even before the dealings with Commonwealth.

I found in some old court records that have nothing to do with the ATC monopoly directly that Universal was formed in 1901 by a Mr. William Butler. Butler had been an ATC Vice President. He left in the late 1890's to found the Union Tobacco Company - which he then sold mere months later to the monopoly, going back to work for them. He then was one of the founders of this Universal Tobacco Company, which in mere months put together a capitalization of $10,000,000 in 1901 dollars, which is one hell of a lot for an upstart founded by a VP who quit his job to make a start up for the second time.

Tobacco Journal articles later in the decade specify the claim that Universal advertised itself as being created to fight the monopoly and allow independent tobacco firms to reach the market. This claim is echoed even in anti-monopoly literature of the time, for example in John Moody's book The Truth About The Trusts.

In 1907, Universal dissolves as the result of a dispute between some of its shareholders with the company for mismanagement. The firm is dissolved, the implication being money returned to investors, and its brands transfer to a newly formed entity to take them over... the Butler-Butler Company started by the very same William Butler whose career is apparently to quit the ATC, form a new company and source independent suppliers, then bring that company quickly into the ATC field yet again. The operations of this fake shell company were run by a George Hill. George's father was Percival Hill, the very same man from the OP who testified that Universal was not a competitor because they were not active in the market. This essentially fake holding company quickly dissapears. See the May 18, 1907 edition of the Journal.

This seems to be more evidence in favor of Pat's idea that the firm was probably under the ATC aegis before the merger. It seems the likely truth to Hill's statements is that Universal wasn't a competitor because, like Brett and the ALC, they were one of the secret subsidiaries of the ATC even before the merger, not because they weren't active in the market. They weren't active in the market because they weren't supposed to be; they were supposed to source components and give an illusion. It seems likely they were founded specifically to give the appearance of competition without actually doing that. I suspect there are more brands and holding companies like this, that we won't find a 100% smoking gun because no such document ever existed and they were not on paper part of the trust, but operated as part of the trust and lead by the trust's men. I don't think the Federal Government ever fully succeeded in defining the entire scope of the ATC; they defined enough to destroy them and then there was no point in going back to how firms were set up in 1901 and who really had deals with who. Once the monopoly was dead it was all dropped. This leaves it all less than 100% clear when exactly Red Sun joined the monopoly, but I thought I would update.