35 



are transported either by river or railroad to the seaports where they 

 are to be put on steamers and sent to Europe. 2^early all of it is sent 

 to the Dutch markets, most of it going to Amsterdam. 



PRICES AND PROFITS. 



The statistics given in the tables in the appendix to this bulletin 

 show something of the enormous profits which have been made by 

 some of the companies. As a rule, the tobacco j)rocluced in Deli and 

 Langkat brings the best prices of any from the east coast of Sumatra. 

 For example, the Deli tobacco of the crop of 1893 brought an average 

 price of approximately G4 cents per pound, American money; Langkat, 

 62 cents; Asahan, 35 cents; Serdang, 44 cents; Batoe Bahara, only 30 

 cents per English pound. The prices quoted in the tables are, of 

 course, the average price of the whole crop, which consists of all 

 grades and kinds of tobacco. In all crops some of the small and 

 inferior tobacco brings only 5 or (3 cents per i^ound. With the 1892 

 crop some of the third length, measuring from 9 to 12 inches, was sold 

 for as much as $1.55 i)er pound. Frequently the lirst-class wrapper 

 leaf will sell for as much as $2.40 per pound, and finer grades for much 

 more than this. 



It will be seen from the tables that some of the companies have paid 

 during their existence and are still paying enormous dividends. It is 

 true that their quotations are high and the shares sell at a big pre- 

 mium, but even granting this the profits are enormous. The stock of 

 the Maatschappij Arendsburg, which has paid the highest dividends of 

 all during its existence, was quoted in 1895 at 730. It was then paying 

 a dividend of 111, making even at that quotation an interest of more 

 than 15 i^er cent on the investment, earning the original capital every 

 year. 



These dividends and the enormous profits made by some of the com- 

 panies induced a great many people to go into the tobacco business, 

 and company after company came into existence. Unfortunately, how- 

 ever, the best soil is limited to a small area, and most of this had been 

 already taken up. The newcomers, therefore, took up land wherever 

 it could be obtained, so long as it was on the east coast of Sumatra. 

 Besides this, many people who knew little or nothing about tobacco 

 commenced planting it, attracted by the dividends. The result could 

 readily have been foreseen. They produced, indeed, Sumatra tobacco, 

 but of such an inferior quality, of a bitter, oily taste, and with a poor 

 "burn," that prices went down rapidly until, when the crop of 1890 was 

 sold for 29 cents per pound, American money, the crash came. This 

 crop was 50,000 bales larger than the crop of 1889. The cost of the 

 production per pound of this tobacco is believed to be from 32 to 30 

 cents per English pound in American money, and as a consequence no 

 dividends were declared at that time. It is true that there were other 

 reasons which forced the price down. Among others, the United States 



