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Remedies? The November issue of FORTUNE, out this week, estimates that Lucky Strikes, Camels, Chesterfields and Old Golds will sell to the extent of about 84½ billion cigarets in 1932, some 18 billion less than last year. Practically all of this loss will go to the10¢ cigaret. What can Messrs. Hill, Williams, Toms & Belt do about it? FORTUNE suggests five possible ways of eliminating 10¢ competition: 1) Raising the price of tobacco just enough to wipe out the ten-centers' profit margin. This can be done by heavy buying, but surplus stocks over a long period would hurt the 15-centers. 2) Ceasing their opposition to governmental increase of cigaret taxes from $3 to $3.50 per 1,000, an expensive remedy. 3) Cutting prices. 4) Putting out special "fighting brands" of 10¢ cigarets. 5) Training their advertising guns directly at the enemy, which might do the ten-center more good than harm. A FORTUNE suggestion to President George Washington Hill: "STALE FISH STINK. ... So do cheap cigarets."
The makers of the four leading 10¢ cigarets (there are a dozen others, with local sales) worried little last week. If suspicion were cast on the quality of their brands they could point to their sales as proof that the public likes them. They are all oldtime tobacconists, sure they can keep costs down low enough to profit on a small margin. They point out that tobacco has averaged 19¢ per Ib. for the past 20 years, is not likely to rise far above that. As for the fairness of taking advantage of advertising-increased cigaret consumption while not advertising themselves, they only shrug their shoulders.
Revenge. Most colorful of the 10¢-cigaret men are President Reed of Larus & Brother (White Rolls) and Woodford Fitch Axton, burly president of Axton-Fisher Tobacco Co. (Twenty Grand). Both grew up fighting the old tobacco trust, both, until recently, were heads of small independent companies producing chiefly pipe and chewing tobaccos. In the early days of the century when American Tobacco Co. was gobbling up independents in the South, William T. Reed was one of its bitterest foes. He used to hide in grocery store cracker barrels to get evidence against the Trust's agents. He won his fight, remained independent, was making a neat profit out of Edgeworth when his 10¢ idea put him into the cigaret business in earnest.
Woodford Axton was selling groceries around eastern Kentucky when, in 1899, a debtor paid him in tobacco-preparing machinery. The debt was $60. Salesman Axton decided to sell tobacco instead of food, began peddling his product from town to town. Soon the trust was after him, too, giving away tobacco to his customers when he refused to sell out. Big and hearty, "Wood"' Axton had enough friends to stay in business. He formed Axton-Fisher Tobacco Co. with a partner, George H. Fisher, now dead. They moved from Owensboro to Louisville and began selling smoking and chewing tobaccos throughout the Ohio Valley, prospering in a comparatively small way.