A stockbroker with a dispassionate sense of humor tells me "there are only two emotions on Wall Street -- greed and fear." Certainly, those emotions are also characteristic of much of the human race, but the stark amorality of Wall Street in responding to investors' greed and fear can be profoundly upsetting.
Kidder, Peabody and Co., one of the world's largest investment firms, sends its clients a weekly newsletter with investment analysis and advice. Each edition contains a section called "Focus," which points out a particularly recommended stock.
A few weeks ago the "focus" was on Philip Morris, the world's largest producer of cigarettes. Though it has diversified into food (Kraft), beer (Miller) and other products, cigarettes remain Philip Morris' bonanza crop.
Kidder-Peabody's newsletter tells us:
"While the decline in U.S. tobacco consumption remains constant at 2 percent annually, worldwide volume gains for the four dominant producers -- Philip Morris, American Brands, B.A.T. Industries and RJR Nabisco -- have accelerated, reaching a combined 5 percent last year. This year we are forecasting a 4 percent worldwide volume growth, one of the most rapid real growth rates of any major industry."
Later, it tells us why we should invest in Philip Morris:
"Worldwide economic/political developments have sharply boosted international volume growth. Profit progress at Philip Morris is based upon domestic pricing flexibility, growth in worldwide demand for cigarettes and the internal generation of excess cash."
Thanks to several decades of mounting evidence of the lethal potential of tobacco and a well-orchestrated anti-smoking campaign, most Americans know that cigarettes kill some 430,000 Americans a year through the cancer, heart disease, emphysema and other consequences of tobacco addiction. At home the message is working; the U.S. consumption of cigarettes (also inhibited by taxes) has been declining for a decade.
The message has not been so well assimilated in the rest of the world, especially in the developing countries. There, inflicting people with early death through tobacco addiction can seemingly be accomplished relatively free of the appeals to conscience that prevail in the United States -- and free as well of the warnings required by law on domestic cigarette packages and advertising.
Not only are anti-smoking warnings not general in the Third World, but according to the London Economist, the U.S. government's trade representatives have actually threatened retaliatory tariffs against countries that seek to disseminate such warnings to their consumers, specifically Thailand and Taiwan.
Thailand has so far stood by its anti-smoking campaign. In
appealing to Taiwan, however, U.S. trade officials went right along with the tobacco industry by offering a position paper with this incredible statement: "We are unaware of any evidence that tar and nicotine information is used by smokers."
Taiwan's application to join the General Agreement on Tariffs and Trade was met by this threat from two tobacco-state senators, Jesse Helms of North Carolina and Mitch McConnell of Kentucky: "The actions of your government relative to changes in the treatment of imported tobacco could well impede progress."
In short, buy our cigarettes if you want to join GATT.
The defense of such large-scale invasion of the overseas market would presumably be that the demand for cigarettes is there; if Philip Morris doesn't fill it, someone else will. That's probably true, though it seems just one level removed from providing cocaine or prostitutes "because the demand is there."
Furthermore, in a monumental example of hypocrisy, the U.S. government, while requiring health warnings at home, spends some $15 million a year just to promote American tobacco products at home and abroad.
That's one of the reasons for the "growth in worldwide demand for cigarettes," that Kidder-Peabody advances in its pitch for Philip Morris. Presumably, investors -- whether a poor widow or a billion-dollar pension fund -- want to get the best return. That's all that counts. It isn't enough.
There is something vile and ignominious in a company -- whose predatory impulses are restrained by health warnings in the United States -- shifting its emphasis to poorly informed and unsophisticated people of the Third World, and even blocking the efforts of their governments to counsel their own citizens with the same warnings required by law in the United States.
One estimate from the World Health Organization is that at the rate cigarette usage is increasing, by the year 2025 7 million people a year will die from smoking-related ailments.
One of them died even as I was writing this article. He was Wayne McLaren, believed to be one of the original models for the "Marlboro Man," Philip Morris' worldwide symbol for cigarette-associated virility. (Philip Morris says he never posed for them; Mr. McLaren, who became an anti-cigarette crusader, said he certainly did). A pack-and-a-half-a-day smoker for 25 years, he died July 23 of lung cancer.
That, it seems to me, is one of the results from investments in Philip Morris that Kidder-Peabody forgot to mention.
L But I guess that's not supposed to be Wall Street's problem.
Gwinn Owens is a retired editorial writer for The Evening Sun.