Business: Cigarets

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To understand well last week's chief news of cigarets & cigaret counters it is necessary to recall these facts:

1) Cigarets are the most profitable item of the U. S. tobacco industry. For example, P. Lorillard & Co. at one time gave more attention to the promoting of chewing tobacco ("Beechnut") than to the exploiting of their cigaret brands "Murads," "Helmars," "Deities" and "Moguls." Last year they began making and advertising "Old Gold" cigarets; last week in large display advertisements they issued "A Word of Appreciation. . . . This message of thanks is offered by Lorillard as an expression of deep appreciation to the Cigaret Smokers, Dealers and Jobbers of this community for the friendly co-operation all three have given in helping to establish the new Lorillard Brand—OLD GOLD. . . ."

2) Last year United Cigar Stores Co. (Charles A. Whelan, president & chairman of directors) and Schulte Stores Corp. (David A. Schulte, president) created Union & United Tobacco Corp. The financing was very involved: the Union & United acquired stock in both the United and the Schulte companies; those two companies took controlling stock of the Union & United company which they had created. The effect of the combination, however, was simple: 5,000 Schulte and United retail stores were made to cooperate instead of let to compete.

3) The Union & United Tobacco Co. (the Whelan and Schulte cooperating interests) recently created a subsidiary, Union Tobacco Co., to manufacture tobacco products. The subsidiary Union Tobacco Co. at once leased the factories of the Tobacco Products Co. The principal stockholder of Tobacco Products was George J. Whelan, brother of Charles A. Whelan and a co-founder of United Cigar Stores.

4) The American Tobacco Co. makes "Lucky Strike," "Herbert Tareyton," "Melachrino," "Omar" and "Pall Mall" brands of cigarets. "Lucky Strike" is its best advertised and most popular brand; it sells for 15c a package of 20. The others are more expensive. Straw-tipped Melachrinos sell for 35c a package of 20.

Recalling these facts, the significance of Charles A. Whelan's statement last week becomes apparent. He announced that the Union Tobacco Co. will buy from the American Tobacco Co. a number of its higher grade and costlier cigaret brands. Later Union Tobacco will buy the right to manufacture other expensive brands from other manufacturers. Of such costly cigarets about 34,000,000 are sold each day, the customers being not particular about their brands. Union Tobacco will try to concentrate this "floating" consumption on a few brands which it will "puff" with $10,000,000 of advertising to be spent the next two years.