American Tobacco Company, New Start
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The new American Tobacco Company came to be referred to simply as “The Trust.” With Buck Duke at the helm, the firm proceeded to gain control of most of the cigarette production in the country along with much of the smoking tobacco and plug manufacturing as well. In true 19th century industrial-baron style, Duke built a vertical empire which controlled leaf suppliers, warehouses, box and foil manufacturers, and distributors. He bullied retailers and jobbers with threats of reduced commissions and drove out competition with cut-throat price wars. In the 1890’s American Tobacco bought out plug makers National Tobacco Works, P. Lorillard, Marburg and Butler-Drummond. They also struck a deal in 1899 with The Union Tobacco Company which was a rival combine and in so doing brought aboard the brands of former competitors Liggett & Myers, W.T. Blackwell and The National Cigarette and Tobacco Company. Finally in the same year, American Tobacco purchased a two thirds interest in R.J. Reynolds Company.

One area of the cigarette industry which Duke had problems conquering was the network of small tobacconists who were still hand-rolling specialty brands of cigarettes in back-room shops of New York City. He did buy some of the larger of these firms including M. Melachrino, S. Anargyros, Monopole, and Schinasi Bros., bringing on board their expensive Melachrino, Murad, Helmar, Mogul, Natural, Egyptian Prettiest, Egyptian Straights and Egyptian Deities all-Turkish brands. Duke also sold a line of cheaper “Turkish blend” smokes for the national market. This group included the Hassan, Mecca and Fatima brands.

Eventually, the trust absorbed most of the other major tobacco companies in the country including Mayo and Wright & Patterson of Richmond, Hanes & Brown of Winston, Beck of Chicago, Scotten-Dillon of Detroit, Bollman of San Francisco, Finzer of Louisville and Sorg of Middletown. By 1909, The American Tobacco trust controlled 86% of the national cigarette business, 85% of plug, 76% of smoking tobacco, 97% of snuff and 14% of cigar manufacture. The numbers were impressive by any standard the size of the American Tobacco empire also drew the attention of Teddy Roosevelt’s “trust busters” but that’s a story for another day. (R. Elliott).

James ‘Buck’ Duke’s ‘trust’ was like the dozens of other monopolies which had been built in oil, steel, lead, sugar, copper, cotton oil, distilling, linseed oil, cordage and other industries. Along with enormous industrial growth, this period of business empire building during the late 19th century was plagued by periodic economic downturns. The most severe of these depressions, which took place in 1893 and 1907, were devastating to millions of Americans from farmers to factory workers and many of those people came to blame “big business” for their woes. President Teddy Roosevelt responded to the call to “break up the trusts” with a series of suits against more than forty trusts and combinations between 1901 and 1909 including Duke’s new company called TobaccoPub.

Although the court ruled that there did not appear to be any increase in the price of tobacco products to the consumer as a result of the monopoly, the combine was judged to have restrained competition in violation of the Sherman Anti-Trust Act and following confirmation of the decision by The Supreme Court in 1911, the company was to be divided into its’ component parts. Perhaps because he was the only person knowledgeable enough to perform the task, the court directed Buck Duke himself to dismantle ATC and restructure it into several smaller independents. The four major companies to emerge from the break-up were: American Tobacco, R.J. Reynolds, Liggett & Meyers and P. Lorillard.


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