Standard Commercial Tobacco Company, Incorporated

Standard Commercial Tobacco Company, Incorporated
Item# 3886

The Standard Commercial Tobacco Company was founded in 1912 by Turkish immigrant Ery Kehaya, Sr., the son of a revered teacher of religion and ethics and his wife, also from a family of religious educators and prelates. Kehaya grew up in a tobacco-growing region of Turkey along the Black Sea.

Garnering a solid reputation for the good quality of its imported Oriental tobacco, the company saw steadily increasing sales and was subsequently incorporated in Delaware in 1916. That year, Standard Commercial entered into a contract to provide Oriental leaf tobacco to the R.J. Reynolds Tobacco Company. When offered a commission on the purchases, Kehaya said that he would prefer to be paid with interest in Reynolds, a company he believed offered tremendous opportunity for growth. He was right; his original shares in Reynolds would over the next ten years be worth about $5 million.

In 1917, Kehaya married Grace Whitaker, the daughter of a prominent North Carolina tobacco manufacturer. During this time, on the brink of U.S. involvement in World War I, Standard Commercial met with some misfortune. Kehaya had decided to diversify his interests, and his company had purchased two steamships, one of which was dubbed the Grace. However, that sideline business came to an abrupt end as Kehaya and Grace, on their honeymoon, learned that their two ships had been sunk by the Germans. Also during this time, as Bolshevik forces overthrew Kerensky's regime in Russia, Standard Commercial's large store of tobacco in Russia was threatened with confiscation. While U.S. businesses, investors, and banks with holdings in Russia were losing fortunes daily, Kehaya came up with a unique plan. Whereas other companies tried and failed to move merchandise out of Russia via railroads and established trade channels, he arranged for barges to move his tobacco up the Volga River to the White Sea and then on to the Arctic Ocean, on their way to the North Pole. Through this less traveled, and therefore unguarded, route, the tobacco reached its destination safely.

In the 1930s, the company purchased a controlling interest in the Axton-Fisher Tobacco Company of Louisville, Kentucky, which produced the increasingly popular "Twenty Grand" cigarette brand for ten cents a pack, undercutting the more expensive brands of Camel, Lucky Strike, and Chesterfields. Standard also entered into an agreement with the Jas. I. Miller Tobacco Company, purchasing and processing some of that company's products.

Axton-Fisher continued to prosper in the mid-1930s, and Standard borrowed money to buy up its remaining stock. However, the acquisition soon soured, when, in 1937, a devastating flood hit the Ohio Valley, submerging the warehouse in which Axton-Fisher stored its redried tobacco. Costly efforts were made to salvage the tobacco, but Standard's losses and debt load were mounting. Standard Commercial and the once-promising Axton-Fisher eventually went into bankruptcy. At that point, the Bank of America came to the rescue, becoming Axton-Fisher's majority shareholder and taking over its management, while Standard Commercial tended to its own problems. In 1944, the Bank of America decided to sell Axton-Fisher's physical assets to Philip Morris and to liquidate all assets. As the minority shareholder of Axton-Fisher, Kehaya found an interested buyer in the Jas. I. Miller Co., which paid a good price for the tobacco inventory and helped Standard Commercial to withstand the disaster, albeit so heavily scaled-down in size and scope that in the mid-1940s the company was not much more than a handful of employees and the founder's will to reemerge.

By 1947, with continued assistance from the Bank of America, all of Standard's outstanding debts from the Axton-Fisher disaster were paid, and, with the end of the war, the company was ready to regain its momentum. By the end of the decade, the company had reestablished relations in the East and in Europe and had reinitiated trade with Greek and Turkish markets. Standard also formed a joint venture in Greece that was the largest of its kind at the time.

Later the company would join forces with Dibrell Brothers and diversify into the wool business.

Close Up of Vignette:

Certificate: Common Stock, issued in the 1920s

Printer: E. A. Wright Bank Note Company

Dimensions: 8 1/4 (h) x 11 1/2 (w)

State: KY-Kentucky

Subject Matter: Tobacco Products

Vignette Topic(s): Eagle Featured

Condition: Vertical fold lines, punch hole cancels in the signature areas and body, and some toning and edge faults from age.

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