Lucky Strikes Again: L.S./M.G.W.H

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<ul><li><p>CFA Institute</p><p>Lucky Strikes Again: L.S./M.G.W.H.Author(s): Robert I. CumminSource: Financial Analysts Journal, Vol. 39, No. 2 (Mar. - Apr., 1983), pp. 56-57Published by: CFA InstituteStable URL: .Accessed: 18/06/2014 01:46</p><p>Your use of the JSTOR archive indicates your acceptance of the Terms &amp; Conditions of Use, available at .</p><p> .JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact</p><p> .</p><p>CFA Institute is collaborating with JSTOR to digitize, preserve and extend access to Financial AnalystsJournal.</p><p> </p><p>This content downloaded from on Wed, 18 Jun 2014 01:46:21 AMAll use subject to JSTOR Terms and Conditions</p><p></p></li><li><p>by Robert I. Cummin </p><p>Luck;Strikes Rgain: L.S./M.II.W.H. </p><p>G EORGE WASHINGTON HILL, presi- dent of The American Tobacco Co. from 1925 until his death in 1946, was a tre- </p><p>mendously successful marketer of cigarettes in the era between World Wars, when cigarettes became the dominant vehicle for tobacco con- sumption in the U.S. and eventually in the world. The self-effacing managers of R.J. Reynolds Tobacco (Camels) and Liggett &amp; Myers Tobacco (Chesterfields) also achieved great success in pro- moting their own brands, but Hill was more in- novative in advertising and personally more colorful-always in the news. </p><p>American Tobacco's best known and best sell- ing brand during those years was Lucky Strike, which, propelled by a series of aggressive pro- motions and slogans, held the number one or number two rank in the industry most of the time. The first and most enduring Lucky Strike slogan was "It's Toasted," whatever that means. One of the most effective and most controversial was "Reach for a Lucky Instead of a Sweet," which greatly upset the sugar industry. Hill deleted the last three words, but the weight- control theme continued with pictures of slender individuals casting horribly bloated shadows. "With Men Who Know Tobacco Best, It's Luckies 2 to 1" featured tobacco farmers and babbling auctioneers. Hill's last great slogan for Luckies, "L.S.IM.F.T." translated into "Lucky Strike Means Fine Tobacco." The brand was continually and heavily promoted through billboard, maga- zine, newspaper, radio and eventually television advertising, all of it reflecting the Hill genius. In the 1950s, however, the health issue brought in the long cigarette, the filter and the low-tar brands and extinguished Lucky Strike as a domi- nant brand. Today American Brands, as Ameri- can Tobacco is now named, is trying to revive its old winner, promoting the new, filtered Lucky Strike with the slogan "Lucky Strikes Again." </p><p>George Washington Hill was a character and </p><p>an overwhelming presence. The legends, the stories, the controversy that surrounded him dur- ing his career have dimmed in the 36 years since his death. But the lesson of how one man direct- ed his whole energy and talent to market one product is too valuable for the investment com- munity to lose. </p><p>As a security analyst covering the tobacco in- dustry, I used to call on Hill at his company's gray Spartan headquarters on lower Fifth Avenue in New York's garment district. It was a special treat for an analyst to meet Hill; most often we saw Paul Hahn, who was a lawyer and knew ex- actly what information could be released. Hahn later successfully launched Pall Mall cigarettes himself and eventually became president of American Tobacco. The fact that Hahn invariably substituted for his short-fused boss at company annual meetings probably accounts for meeting- gadfly Lewis D. Gilbert's achieving three score and ten maturity. </p><p>Hill's corner office, like the headquarters building, was strictly for business, plain enough to turn the stomach of today's new-minted MBA. His desk was large and unadorned, glass-topped I think. Nothing on it but a cigarette box filled with you-know-whats. I don't recall an ashtray. On the wall hung a garish poster depicting the Bull-Durham bull. (For the benefit of those too young to remember, Bull-Durham was a small cloth bag of desiccated vegetable matter with cigarette papers for rolling your own; nowhere on the package was the content positively iden- tified as tobacco.) </p><p>Hill sat at his desk as if he were ready to spring out of his chair but radiating slightly chubby good humor. He always wore his hat in the office, most likely to shelter a bald head (although some peo- ple suggested that he was showing who was king). He wore gorgeous bow ties, most often of Paisley pattern. I had always heard that he blew his nose on a bathtowel kept in his desk drawer, but he never did this in my presence. </p><p>While Hill seldom mentioned anything about American Tobacco's current business, he seemed </p><p>Robert Cummin is Vice President of Lloyd Investments, Inc., Philadelphia, and a member of the Editorial Board of this journal. </p><p>FINANCIAL ANALYSTS JOURNAL / MARCH-APRIL 1983 C 56 </p><p>This content downloaded from on Wed, 18 Jun 2014 01:46:21 AMAll use subject to JSTOR Terms and Conditions</p><p></p></li><li><p>to delight in giving advice to young visitors. He often credited this advice to James Buchanan Duke, the formidable founder of American Tobacco: </p><p>"Young man, always lead-never follow. Buck Duke taught me that 30 years ago, and it's just as true today." </p><p>"Young man, every tub must stand on its own bottom. Buck Duke taught me that 30 years ago, and it's just as true today." </p><p>When Duke left American Tobacco in 1911, he was succeeded as president by Percival Hill, George Washington's father. Percival Hill died in 1925 and was succeeded by his son. Duke died the same year, ending an era. </p><p>Hill was not shy about offering advice to older people. For instance, the tale circulated that the eldest son of a newly inaugurated U.S. President called on him and suggested that he would like to be given the American Tobacco insurance ac- count. Eldest Son hinted that if this were to hap- pen, American Tobacco might have an easier time in its relations with the government. </p><p>"I'll get you an answer right away," said Hill. He picked up the telephone and put in a call to the White House. "Hello, Frank. This is George Washington Hill. Your boy is here trying to sell me insurance. If you know what's good for him, you'll call him off. Thanks, Frank. Not at all. Good-bye." Turning to Eldest Son he continued, "You hear, boy? There's your answer." </p><p>This is no place to run through a comprehen- sive list of the Hill stories that circulated during his life. The richest source may be his ex-son-in- law, who wrote The Hucksters, a novel about the advertising trade, with a Hill-like character its piece de resistance. From my long coverage of the tobacco industry I saw enough of Hill to accept one last outrageous and illustrative tale about him. I offer it to you without compunction or confirmation. </p><p>G.W. Hill In Court Any truly aggressive and successful company </p><p>and its management are bound to spend much time and money defending themselves in court during the 20th century. Buck Duke had built American Tobacco into a trust controlling 82 per cent of the domestic tobacco business. The trust- busters broke it up in 1911, but American Tobacco continued to flourish. In the 1930s Hill, guided by lawyer Hahn, successfully repelled a major </p><p>stockholder, the redoubtable "Rah-Rah" Rogers, who had attacked the company's exceptionally generous profit-sharing plan. </p><p>But in his last court appearance of which we have knowledge, Hill starred not only as a fighter but also as a dramatic actor. On this occasion he was scheduled as a witness in a federal process against his company. Perhaps it was antitrust; perhaps it was an alleged Robinson-Patman violation. Who remembers? Anyhow there was a courtroom with a judge, a jury and a table of young government attorneys all ready to charge. But no George Hill. The judge asked whether Mr. Hill was in the court, drew a blank, and became visibly vexed. But just as patience was about to expire, the door burst open and Hill hurried in, out of breath, cheeks red, arms full of bundles. </p><p>In his soft Southern voice, "Oh, Your Honor, I was held up in traffic, and I apologize to you and to all these lovely people. I just hope I haven't inconvenienced you." </p><p>From the Court: "All right, Mr. Hill, let's get on with it." </p><p>Hill headed up the aisle, not to his seat but straight to the jury box. He tore open his bundles, revealing cartons of Lucky Strikes, which he began handing out to the jurors. Immediately a chorus of yelps from the government attorneys and a bang of the gavel. </p><p>From the Court: "Mr. Hill, do you realize that you are tampering with a federal jury?" </p><p>"Oh, Your Honor, I had no intention at all. I was just trying to do something for these fine people who have been so patient all through this trial. " </p><p>From the Court: "MR. HILL, TAKE THEM BACK!" </p><p>Hill won the case, of course. Somehow the government attorneys and the judge seemed on the bad side. Hill and the jurors, of course, were the good guys. </p><p>In my mind there are two imponderables in the case. First, did Hill wear his hat in the courtroom? Second, did Hill carefully prepare and rehearse the scenario of his court appearance? After due deliberation, I conclude that he uncharacteristic- ally doffed his hat out of respect for the Court and that he planned and executed the whole performance himself. </p><p>Mr. George Washington Hill, wherever you are, as they say in the thittah, "Break a leg!" E </p><p>FINANCIAL ANALYSTS JOURNAL / MARCH-APRIL 1983 O 57 </p><p>This content downloaded from on Wed, 18 Jun 2014 01:46:21 AMAll use subject to JSTOR Terms and Conditions</p><p></p><p>Article Contentsp. 56p. 57</p><p>Issue Table of ContentsFinancial Analysts Journal, Vol. 39, No. 2 (Mar. - Apr., 1983), pp. 1-80Front Matter [pp. 1-51]Editor's Comment: "The Search for Stable Money": Who Do You Trust? [p. 4]Editorial Viewpoint: Tell It to the SEC [p. 6]Pension Fund Perspective: The Investment Policy Challenge Ahead [pp. 10-11+50]International Exchange: Forecasting: Investment Decisions in a Rapidly Changing World [pp. 12+80]Objective Economics: Will the Real Laffer Curve Please Stand up? [pp. 15-24]How Well Does Replacement Cost Income Explain Stock Return? [pp. 26-30+39]Applications of Inflation-Adjusted Accounting Data [pp. 33-39]Historical Cost Earnings versus Inflation-Adjusted Earnings in the Dividend Decision [pp. 41-50]Are Constant Dollar Disclosures Informative? [pp. 52-55]Lucky Strikes Again: L.S./M.G.W.H. [pp. 56-57]Pricing of Municipal Bond Underwritings: It May Pay to Invest When Underwriters Don't [pp. 58-64]Do Analysts Use Inflation-Adjusted Information? Results of a Survey [pp. 65-72]Current Cost Profitability of British and American Industry [pp. 73-78]Book ReviewsReview: untitled [pp. 79-80]Review: untitled [p. 80]</p><p>Back Matter</p></li></ul>