Tobacco Industry

Tobacco Industry. Few commercial enterprises have had more economic, social, and medical impact, and provoked more political and cultural debate than the tobacco industry. Tobacco, long cultivated and cured by North American Indians, was first transported to Europe by Christopher Columbus. Cultivation by English colonists began in Virginia in 1612, when John Rolfe planted the first crop. Tobacco exports—limited to England or English colonies by the Navigation Act of 1660—proved crucial to the Chesapeake region's economy throughout the Colonial Era. In 1770, North American growers exported more than £900,000 worth of tobacco to England. The spread of tobacco culture was also intimately linked to the growth and expansion of slavery.

Tobacco remained vital to the South's economic well‐being in the early national era, as production expanded to supply a growing export market and to meet Americans' own fondness for snuff, pipe tobacco, chewing tobacco, and cigars. As tobacco cultivation spread westward into Kentucky and Tennessee, annual output increased from 110,000 to 160,000 hogsheads in the years 1790–1860.

The origins of the modern tobacco industry, characterized by the mass production and mass marketing of tobacco products—including the increasingly popular cigarettes—dates to 1865, when Washington Duke started a fledgling tobacco manufactory in Durham, North Carolina. Duke's enterprise flourished as a manufacturer of plug and chewing tobacco, but it was his son, James Buchanan Duke (1856–1925), who took over W. Duke and Sons in the 1880s, who built a financial empire that soon dwarfed all other tobacco companies. The pivotal moment came in 1884 when James Duke secured exclusive rights to a machine developed by Virginian James A. Bonsack that could mass‐produce cigarettes. While cigarette manufacturing had been an expensive and time‐consuming enterprise involving hand rollers, a single Bonsack machine could produce over 100,000 cigarettes a day. In 1889, Duke organized the five largest U.S. tobacco enterprises—W. Duke and Sons, Kinney, Allen and Ginter, William S. Kimball, and Goodwin and Company—into the mammoth American Tobacco Company (ATC), originally capitalized at $25 million. Duke became its first president.

Acquiring or driving out of business over 250 tobacco manufacturers over the next decade, the ATC by 1907 was one of the world's most powerful industrial monopolies, now capitalized at $450 million and producing nearly 80 percent of the world's plug and twist tobacco, 71 percent of smoking tobacco, and over 96 percent of snuff tobacco. Duke pioneered in turning a portion of his profits back into the mass marketing of his major brands. For tobacco farmers, particularly those in Virginia, North Carolina, and Kentucky, Duke's methods and market dominance resulted in prices that were well below the cost of production. Thousands of small family farmers were forced into poverty and chronic indebtedness. While farmers in central Kentucky organized a successful strike in 1908 against the ATC and ultimately forced Duke to pay higher prices, the ATC's firm control of the entire tobacco industry continued until the U.S. Supreme Court, in a 1911 antitrust case, split the tobacco giant into several smaller companies, including Liggett and Myers, Lorillard, and R.J. Reynolds.

Despite periodic reform campaigns to curtail or prohibit cigarettes, smoking by World War I had become nearly ubiquitous, and its popularity increased as Hollywood began portraying cigarettes as glamorous. Ads even spoke of cigarettes' beneficial health effects in promoting endurance and reducing nervousness and throat irritation. A new generation of industry leaders emerged, such as the ATC's George W. Hill who orchestrated a highly successful marketing campaign for Lucky Strike cigarettes, launched in 1917 to compete with R.J. Reynolds' Camels. While the industry enriched its executives and stockholders, many tobacco growers remained impoverished. Plummeting agricultural prices during the Depression of the 1930s further damaged the tobacco economy of the rural South. In 1933, congressional leaders from tobacco‐producing states succeeded in including tobacco in the Agricultural Adjustment Act, which established a price support system for agricultural commodities in exchange for production limits.

Tobacco use continued to increase after World War II. By 1964, 42 percent of adult Americans smoked cigarettes. In that year, however, confirming what many had long suspected, a U.S. Surgeon General's report established the relationship between smoking and cancer. Although the industry strongly denied any such link, health warnings were added to cigarette packages, and cigarette advertising on television was halted. Nevertheless, despite the growing concern about cancer and heart disease risks, the tobacco industry flourished in the 1970s and 1980s. Industry giants such as Philip Morris and R.J. Reynolds promoted their leading brands aggressively and sought new areas of acquisition and market development, particularly in the consumer‐friendly food and beverage sector. Shrewd marketing campaigns designed to counter the negative publicity made the rugged “Marlboro Man” and the cartoonish “Joe Camel” cultural icons.

Despite mounting medical and scientific evidence linking tobacco and disease, industry leaders continued to insist that no such link had been positively established. They also denied the additional charge that nicotine (a central component of tobacco) was physically addictive. By the 1990s, however, company insiders released numerous internal documents revealing that major tobacco manufacturers had long been aware of tobacco's health risks and its addictive nature, and had initiated advertising campaigns to encourage youth smoking. Its credibility severely damaged, the industry moved in the late 1990s to offset further possibly bankrupting legal challenges by agreeing to a settlement with forty‐six state attorneys general totaling $206 billion. But many issues remained, such as whether Congress would empower the Food and Drug Administration to regulate nicotine as a drug; whether the controversial tobacco price‐support system would survive; and how the numerous existing lawsuits by dying smokers and their families would finally be resolved.

The tobacco industry's devastating toll on countless users of its products, and the grinding long‐term poverty of small‐scale tobacco farmers, are part of the legacy of America's long love affair with tobacco. But although embattled on many fronts, the industry remained an economic behemoth, and tobacco a vital agricultural commodity, as the twentieth century ended. The leading U.S. tobacco company, Philip Morris, manufacturer of Marlboro cigarettes, enjoyed 1998 revenues of $57.8 billion, and was the nation's eighth largest corporation. (Non‐tobacco subsidiaries accounted for part of this revenue.) Global markets beckoned as well, especially in poorer nations, and U.S. cigarette exports in 1998 totaled nearly $4.2 billion.
See also Agriculture; Disease; Factory System; Foreign Trade, U.S.; Industrialization; Medicine: Since 1945; Navigation Acts; New Deal Era, The.

Bibliography

Nannie May Tilley , The R.J. Reynolds Tobacco Company, 1985.
Tracy Campbell , The Politics of Despair: Power and Resistance in the Tobacco Wars, 1993.
Richard Kluger , Ashes to Ashes: America's Hundred‐Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris, 1996.
Jeffrey R. Kerr‐Ritchie , Freedpeople in the Tobacco South: Virginia, 1860–1900, 1999.
Cassandra Tate , Cigarette Wars: The Triumph of “The Little White Slaver,” 1999.

Tracy Campbell