Tobacco Industry

views updated May 18 2018


TOBACCO INDUSTRY. Tobacco in the form of leaf, snuff, chew, smoking tobacco, cigars, and factory-made cigarettes has often been called the United States' oldest industry. Since its introduction to Europeans by American Indians, no other agricultural crop has been more thoroughly entwined with the history of the United States than the growing, processing, and manufacturing of tobacco. In addition, no one product has enjoyed deeper ties to the colonization of the New World and to the expansion of international trade between the New World and Europe, Asia, and the Middle East over the last four centuries. The prospect of farming tobacco and selling it to England brought the earliest British colonists to Virginia and Maryland, and at the end of the twentieth century U.S. companies such as Philip Morris and RJR Nabisco continued to dominate the international cigarette market and stood among the most profitable transnational corporations. U.S. tobacco growing, manufacturing, distribution, marketing, and sales contributed $15 billion in wages to some 660,000 American workers. For many centuries tobacco has been identified with the New World, especially the United States. In the form of the mass-produced cigarette, U.S. tobacco became the virtual international symbol of American modernity. Indeed, students of the industry have argued that the advent of machine-made cigarettes in the 1880s helped inaugurate in the United States the modern era of mass consumer products, mass advertising and promotion, and the professionally managed modern corporation.

However, the last half of the twentieth century saw the U.S. tobacco industry come under pressure from the demonstrated health hazards of smoking and the subsequent steady decline in smoking in the United States and other highly industrialized nations. In response, the industry aggressively pursued expanding into markets in Asia, Eastern Europe, and Africa, prompting the World Health Organization to accuse tobacco manufacturers of fomenting a tobacco epidemic. Equally worrisome for the industry, at century's end the growth of class-action lawsuits, the publication of documents revealing corporate manipulation of the political and legal process and the willful distortion and suppression of scientific findings, and the rise of government antitobacco measures further clouded the future of the domestic tobacco market. Cigarette makers faced the prospect of being demoted to the status of a rogue industry in the eyes of U.S. citizenry.

Early History: Production and Consumption

Most modern tobacco consumption derives from Nicotiana tabacum, which is a species of nightshade plant. The general consensus is that the tobacco plant originated in South America and was spread by American Indians to North America and the South Pacific and Australia. The arrival of Europeans in the New World introduced them

to tobacco, and by the early seventeenth century commercial tobacco became a driving force of colonization in North America and the Caribbean. The Jamestown colony in Virginia owed its very survival to tobacco. A cash crop requiring very intensive labor from planting to harvesting to curing, its cultivation created a demand for conscripted labor, first in the form of indentured European servants on family farms and soon afterward in the form of African slave labor on large landholdings. Two types of tobacco leaf were grown, principally for pipe smoking and, later on, snuff. They were both dark varieties: the more expensive leaf grown in Virginia and the stronger, cheaper orinoco leaf grown in Maryland. In England, demand for tobacco rapidly grew and by 1628 the Chesapeake colonies exported 370,000 pounds annually to England, procuring substantial tax revenues for the state, which overcame early Crown hostility to tobacco cultivation and consumption. Tobacco farming spread quickly to North Carolina, South Carolina, Kentucky, Tennessee, and Georgia. It also extended to two other regions in which cigar (Cuban) leaf cultivation would come to dominate in the nineteenth century: the Northeast (Pennsylvania, New York, Connecticut, and Massachusetts) and, later, the Midwest (Ohio, Illinois, Wisconsin, Minnesota, and Missouri). In 1700 exports of raw leaf from the British Chesapeake colonies reached 37 million pounds and by the outbreak of the American Revolution in 1776 upward of 100 million pounds. At the end of the eighteenth century, the main producers of tobacco were the United States, Brazil, and Cuba. After a decline following the American Revolution, U.S. production rebounded, but only slowly due to the Napoleonic Wars (1799 through 1815) and the War of 1812. Production then rose sharply to 434 million pounds in 1860 and, after a drop due to the Civil War, resumed its growth, averaging 660 million pounds in 1900 through 1905, of which one-half was consumed domestically. From 1945 to the 1980s, U.S. annual production averaged two billion pounds.

Throughout most of their history, Americans overall and men in particular remained the heaviest consumers of tobacco worldwide, principally in the form of chewing and smoking tobacco. Europeans consumed tobacco by smoking it in clay pipes until the eighteenth century, when manufactured snuff became dominant starting in Spain. While chewing tobacco was rare in Europe, it was quite popular in the United States among men and remained so up to the early twentieth century. Pipe smoking was also popular among men and some women in the nineteenth century Women also used snuff. It was taken by New York society women and by women of all classes in the South. In Europe, pipe smoking made a comeback in the nineteenth century at the expense of snuff, but was soon forced to accommodate the new vogues for cigar and cigarette smoking popular both there and in North America. These shifts in consumption patterns stemmed in part from the development in the nineteenth century of new, lighter leaves of the bright and the burley varieties, which were more suitable for chewing and cigarette smoking and competed with the dark leaf grown in Virginia and Maryland. By the end of the nineteenth century, the bulk of U.S. tobacco production had shifted away from low-lying areas of Maryland and Virginia to the Virginia–North Carolina Piedmont region and to Kentucky, where the bright and the burley varieties flourished. By 1919 bright accounted for 35% of the U.S. tobacco crop, burley for 45%.

Industrializing Tobacco and the Rise of the Cigarette

Until 1800 tobacco manufacturing proper was largely carried out in Europe. Initially, U.S. factories were dispersed in the tobacco-growing regions of Virginia, North Carolina, Tennessee, Kentucky, and Missouri, which used slave labor. New York, a center of snuff production, was the exception. Manufacturing of tobacco also thrived among planters who prepared tobacco for chew. After the Civil War, the introduction of steam-powered shredding and cigarette machines and pressures stemming from the rise of national markets led to the concentration of tobacco manufacturing in that sector. Cigar manufacturing underwent a similar evolution somewhat later. Cigars first became popular in the United States after the Mexican-American War, and their manufacture was fairly dispersed in cigar leaf-growing regions. However, by 1905 the greatest centers of cigar manufacturing were Philadelphia, New York, Boston, Cincinnati, Chicago, Baltimore, Richmond, Tampa, and Key West.

In the United States, the convenience and simplicity of smoking cigarettes made from the bright variety of tobacco was discovered by Union and Confederate troops alike during the Civil War. Ready-made cigarettes using mixtures of bright and burley tobacco allowed U.S. manufacturers to develop cheaper brands. U.S. cigarette production boomed between 1870 and 1880, rising from 16 million cigarettes (compared to 1.2 billion cigars) annually to over 533 million, reaching 26 billion by 1916. The growth of the U.S. population between 1880 and 1910 and the decline of chewing tobacco due to anti-spitting ordinances further expanded the market for cigarettes. With this growth arose new aggressive methods of packaging (striking colors, designs, logos, brand names), promoting (gifts, picture cards, free samples, discounts and rebates to jobbers, retailers, etc.), and advertising (newspapers, billboards, posters, handbills, endorsements) cigarettes to an emerging national market.

In 1881 James Bonsack patented a new cigarette-making machine that turned out over 120,000 cigarettes per day. Until then, factory workers rolled up to 3,000 cigarettes a day. The Bonsack machines made the fortune of James B. Duke, who adopted them in 1884. By securing exclusive rights over Bonsack machines and devoting 20% of his sales revenues to advertising, Duke helped create a mass national market, which he soon dominated. By 1889 W. Duke and Sons had become the world's leading manufacturer of cigarettes, with 40% of the U.S. market. That same year Duke pressured his rivals into forming the American Tobacco Company with Duke as president. The trust did not own any tobacco farms, and employed its considerable leverage to depress the price of tobacco leaf. This unequal relationship to the detriment of growers reached a crisis point forty years later during the Great Depression, necessitating the tobacco price support program of 1933—still in place at the end of the twentieth century—which rescued tobacco growers, many of them tenant farmers, from certain ruin. The trust also proceeded to absorb important rivals as well as manufacturers of chew, snuff, smoking tobacco, and cigars including R.J. Reynolds, P. Lorillard, Liggett and Myers, the American Snuff Company, and the American Cigar Company.

The geometric increase in cigarette production spurred the trust to make a major innovation in modern corporate practices: to seek outlets in foreign markets (not controlled by state monopolies), often by buying local companies outright (United Kingdom, Japan) and later by setting up factories abroad (China). American Tobacco Company's incursion into Britain provoked British companies to form a cartel, Imperial Tobacco. In turn, in 1902 Imperial Tobacco formed a joint company, but with minority interest, with American Tobacco called the British-American Tobacco Company (BAT). Together the U.S. and U.K. cartels exploited overseas markets while withdrawing from each other's domestic market. At the turn of the century, upward of one-third of the U.S. trust's cigarettes were exported and 54% or 1.2 billion were exported to China alone. By 1910, the year before its demise, the trust accounted for 75 percent of U.S. tobacco production of all kinds. In 1911, the Supreme Court found the American Tobacco Company in violation of the Sherman Antitrust Act and ordered its breakup into four major companies: the American Tobacco Company, Liggett and Myers, R.J. Reynolds, and P. Lorillard.

In 1900 machine-made cigarettes still accounted for only 3 to 4 percent of U.S. tobacco leaf production. Their greatest growth lay ahead: by 1940 the figure had risen to 50 percent (or 189 billion cigarettes) and by 1970 to 80 percent (or 562 billion cigarettes). In 1913 the newly independent R.J. Reynolds launched Camels, the "first modern cigarette." An innovative blend of burley and Turkish tobacco backed by a massive publicity campaign, Camels were quickly imitated by American's Lucky Strike and Liggett and Myers' revamped Chesterfield cigarettes (in 1926 Lorillard jumped in with its Old Gold brand). All three brands stressed their mildness and catered their appeal to men and women alike. Between them the three brands enjoyed 65 to 80 percent market share through the 1940s. The 1920s saw the "conversion" of many tobacco consumers to the cigarette in the Unites States, United Kingdom, Europe, China, and Japan. Between 1920 and 1930, U.S. cigarette consumption doubled to 1,370 cigarettes per capita.

Smoking and Health

As in the previous century, war was to prove a boon to U.S. tobacco, especially cigarettes. The rations of American soldiers and sailors included tobacco. With each world war, U.S. consumption of tobacco jumped and that of cigarettes soared, leaping 57 percent between 1916 and 1918 and 75 percent between 1940 and 1945. Per capita consumption in the United States reached almost 3,500 per year by 1945, a rate matched only by the United Kingdom and Canada. It would be twenty years before nations in continental Europe and East Asia would achieve similar rates. By 1955 in the United States, 57 percent of men and 28 percent of women smoked. A veritable culture of cigarette smoking had arisen. It was a culture of glamour, style, and modern individualism featured and promoted in fashion magazines and Hollywood films It would appear that the widespread movement by women to adopt cigarettes began prior to advertising campaigns actively directed at them and coincided with the culmination of the suffragette movement's drive to obtain the right to vote. Commentators openly associated cigarettes with women's emancipation. Estimates vary, but by 1929 around 16 percent of women smoked cigarettes, a figure that rose to 25 to 35 percent in the late 1940s and peaked at around 30 to 35 percent in the early 1960s.

Ever since King James I's denunciation of tobacco in the seventeenth century as detrimental to one's health and character, tobacco had been the object of recriminations by politicians, religious leaders, heads of industry, and social commentators. At the very moment cigarettes took off as a popular consumer product in the 1880s and 1890s, antismoking crusaders were waging successful campaigns banning the sale or consumption of tobacco in seventeen states, but their success was short-lived: World War I undid most of the legislation. Prior to World War II, cases of lung cancer were relatively rare in the United States, the United Kingdom, and Canada, the heaviest-smoking countries, but rates in men were rising fast, prompting

medical researchers to initiate the first statistical studies of the disease. Results of early studies in the United States and the United Kingdom appeared in 1950 just as the Federal Trade Commission was castigating the tobacco industry for making false health claims for their products. Reports of other studies followed over the next two years resulting in a health scare that precipitated a temporary 10 percent drop in consumption. The industry responded in two ways: by promoting filtered-tipped cigarettes (42 percent of all cigarettes by 1956 through 1960) and mentholated brands, which they claimed to be less harsh and harmful; and by questioning the validity of the studies, a tactic it would pursue with each unfavorable new scientific finding up through the 1990s, especially through its Council for Tobacco Research and the industry's lobbying arm, the Tobacco Institute. Meanwhile, tobacco in the United States, as in many countries, because of its economic importance, the substantial tax revenues it contributed to federal and state coffers ($3 billion in 1964 and $13.4 billion in 1998), and its campaign contributions, benefited from its special status as neither a food nor a drug and thus escaped formal government regulation as to its effects.

Under pressure from health organizations, the government published in 1964 a landmark report of the Surgeon General warning the American public of the dangers of smoking. It was the first in a long series of Surgeon General reports that reviewed existing studies on tobacco-related diseases and, beginning in the 1980s, on women and smoking, nicotine addiction, modified cigarettes, cessation, secondhand smoke, youth initiation, and smoking among racial and ethnic minority groups. The political and economic picture of the domestic market for the tobacco industry had changed. In 1965, the industry had to work vigorously to keep the new cigarette warning labels watered down, and in 1970 the industry withdrew all radio and television ads voluntarily in order to eliminate free broadcast time awarded by the Federal Trade Commission starting in 1967 for antismoking public service announcements. Segregation of smokers in airplanes and other forms of public transportation began in 1972 and was extended to public buildings in Arizona (1974) and Minnesota (1975). New studies on the dangers of secondhand smoke in the 1980s and 1990s galvanized the anti-smoking movement to pressure federal, state, and local governments to ban smoking completely in public buildings, public transportation, stores, theaters, and schools, establish smoking sections in workplaces and restaurants, and, in the case of California, ban smoking in all indoor public areas including workplaces, restaurants, and bars. U.S. cigarette consumption began to decline. Men's and women's rates had already dropped from 52 and 34 percent, respectively, in 1965 to 44 and 32 percent in 1970 and to 38 and 29 percent by 1980, respectively. By 1990, the rates had dropped precipitously to 28 and 23, respectively, and by 1999 to 26 and 22 percent. Per capita cigarette consumption peaked in the early 1970s at around 4,000 and steadily dropped from 1980 (3,850) to 1999 (2,000). Meanwhile, tobacco-related diseases (lung cancer, emphysema, coronary heart disease, stroke) became the leading preventable causes of death—over 400,000 deaths in 1990. For women, the number of deaths due to lung cancer surpassed those due to breast cancer in 1987.

Industry adjusted by offering low-tar and nicotine cigarettes (a 40 percent drop in yields between 1967 and 1981), cheaper brands, and promotion gimmicks such as coupons and giveaways and by opposing systematically growing legal challenges. In a changing market, one company that rose to preeminence was Philip Morris, thanks to its innovative marketing. Its market share surpassed that of previous leader R.J. Reynolds in 1983, and it also took the lead in industry sponsorship of cultural institutions, concerts, and national sporting events. To cover declining U.S. sales, it exploited a traditional outlet for U.S. cigarettes somewhat neglected since World War II: over-seas markets. With the help of the U.S. Trade Representative and North Carolina Senator Jesse Helms in 1986, Philip Morris, along with R.J. Reynolds, forced open East Asian markets previously dominated by state monopolies, and in the 1990s snapped up privatized state-run companies in former communist countries in Eastern Europe. By the end of the century, Philip Morris held 50 percent of the U.S. cigarette market followed by R.J. Reynolds (23 percent), Brown & Williamson (12 percent), and Lorillard (10 percent).

Although faced with a changing market, leading U.S. cigarette manufacturers remained among the nation's most profitable companies. In the 1980s and 1990s they repositioned themselves by diversifying into the beverage and food industry (Nabisco, Kraft Foods), blurring their corporate identities. In 2002 Philip Morris executives proposed renaming the parent company from Philip Morris Companies, Inc., to Altria Group, Inc. The threat of successful lawsuits resulted in the Master Settlement Agreement signed on 23 November 1998 with forty-six states attorneys general. This agreement stipulated payment of $206 billion to states over twenty-five years, reigned in industry promotion practices, especially those targeting youth, and provided $5.5 billion over ten years in aid to vulnerable tobacco growers. To cover the settlement's costs the industry increased prices forty-five cents per pack and Philip Morris announced a 16 percent cut in its U.S. workforce. Down from a high of 75,000 in 1955, in 1990 cigarette manufacturing in the United States directly employed 41,000 people; the number dropped to 26,000 by 1999. In 1999 through 2000, debt-ridden RJR Nabisco sold off its overseas tobacco operations to Japan Tobacco and its food products company to Philip Morris, and spun off its domestic tobacco operations as R.J. Reynolds Tobacco. Finally, at decade's end India had moved ahead of the United States in total leaf and cigarette production (behind China), and the United States fell behind Brazil and Zimbabwe in the export of tobacco leaf while remaining ahead of the United Kingdom and the Netherlands in cigarette exports. U.S. tobacco leaf production, exports, and employment are expected to continue to fall as domestic consumption declines and as productivity, competition from cheaper foreign leaf, and the growth in off-shore manufacturing by U.S. companies increase.


Brandt, Allan M. "The Cigarette, Risk, and American Culture." Daedalus 119 (1990): 155–177.

Centers for Disease Control and Prevention. Tobacco Information and Prevention Source. Available at On-line access to U.S. data including Surgeon General reports.

Cox, Howard. The Global Cigarette. Origins and Evolution of British American Tobacco 18801945. New York: Oxford University Press, 2000.

Glantz, Stanton A., John Slade, Lisa A. Bero, Peter Hanauer, and Deborah E. Barnes. The Cigarette Papers. Berkeley: University of California Press, 1996.

Goodman, Jordan. Tobacco in History: The Cultures of Dependence. New York: Routledge, 1993. Most complete international history.

Jacobstein, Meyer. The Tobacco Industry in the United States. New York: Columbia University Press, 1907. Reprint, New York, AMS, 1968. Important early statistics.

Klein, Richard. Cigarettes Are Sublime. Durham, N.C.: Duke University Press, 1993. The significance of cigarettes in modern culture.

Kluger, Richard. Ashes to Ashes: America's Hundred-Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris. New York: Knopf, 1996. Prize-winning history of U.S. industry's marketing and political strategies.

Parker-Pope, Tara. Cigarettes: Anatomy of an Industry from Seed to Smoke. New York: New Press, 2001. Lively short account.

Rabin, Robert L., and Stephen D. Sugarman, eds. Regulating Tobacco. New York: Oxford University Press, 2001. Recent U.S. developments including the 1998 Master Settlement Agreement.

Robert, Joseph C. The Story of Tobacco in America. Chapel Hill: University of North Carolina Press, 1967.

Schudson, Michael. "Symbols and Smokers: Advertising, Health Messages, and Public Policy." In Smoking Policy: Law, Politics, and Culture. Edited by Robert L. Rabin and Stephen D. Sugarman. New York: Oxford University Press, 1993.

Tobacco Control Archives. Available at Important review of secret industry documents.


See alsoAmerican Tobacco Case ; Tobacco and American Indians ; Tobacco as Money .

Tobacco Industry

views updated May 17 2018


The first permanent English settlement in the New World was a disaster for its early inhabitants. Times got so bad in the "starving time" of 16091610 that some of them resorted to cannibalism. Ten years later the Virginia colony exported 40,000 pounds of tobacco to England and the farmers were getting rich. The first successful commercial crop of tobacco was cultivated in Virginia in 1611 by Englishman John Rolfe and within seven years it had become the colony's leading export. By the 1630s the annual crop was 1.5 million pounds. People were planting tobacco everywhere, even in the roads. In spite of the fact that tobacco exhausted the land, over the next two centuries it was an important cash crop, though increasingly dwarfed during the nineteenth century by a much more important cash cropcotton. After the Civil War and the abolition of slavery, most tobacco was grown by small, independent family-owned farms.

Initially tobacco was produced mainly for pipe smoking, chewing, and snuff. Cigars didn't become popular until the early 1800s. In 1847 the Phillip Morris Tobacco Company was established, which sold hand-rolled Turkish cigarettes. Two years later J.E. Liggett and Brother was formed in St. Louis. In the American West, chewing tobacco became so popular among cowboys and gold diggers that the R.J. Reynolds Tobacco Company built its operations around the product in 1875.

Cigarettes, which had been around in crude form since the early 1600s, didn't become widely popular in the United States until after the American Civil War (18611865). At that time, they were crudely made from scraps left over after the production of other tobacco products, primarily chewing tobacco. The invention of the first practical cigarette-making machine, sponsored by tobacco baron James Buchanan Duke (18561925) brought mechanically rolled cigarettes in the 1880s greatly increased the demand for cigarettes. One of the advertising ploys of the cigarette manufacturers was to point to the "sanitary" nature of mechanically rolled cigarettes. "No dirty immigrants hands" had rolled the cigarettes, in contrast to the cigar manufacturers in the immigrant ghettos of the north. Thus cigarettes became an expression of anti-immigrant sentiment as well as of the advent of science and modernity.

With the introduction of "Bright" tobacco, a uniquely cured yellow leaf grown in Virginia and North Carolina, cigarette sales steadily gained ground over other tobacco products. Cigarette sales surged again in the late 1880s with the introduction of the "White Burley" tobacco leaf. In 1901, six billion cigars were sold and only 3.6 billion cigarettes. With the emergence of the Marlboro brand, marketed from the newly established Philip Morris headquarters in New York, cigarettes soon became the major tobacco product. With the demand for cigarettes on the rise, R.J. Reynolds Company marketed a new cigarette brand called Camel in 1913.

By the early twentieth century, with the growth of cigarette sales and smoking, articles addressing the health effects of smoking began to appear in scientific and medical journals. In 1930, researchers in Cologne, Germany, made a statistical correlation between cancer and smoking. Eight years later, Dr. Raymond Pearl of Johns Hopkins University, reported that smokers did not live as long as non-smokers. By 1944, although admitting that "no definite evidence exists" linking smoking and lung cancer, the American Cancer Society began to warn about the possible health risks associated with smoking.

Despite these warnings cigarette sales sharply increased. During World War I (19141918), armed forces took up the "soldier's smoke." During the 1920s, the tobacco market soared, particularly among women, as cigarettes attracted a growing number of "flappers." The coincidence of the rise of cigarettes and the rise of feminism meant that the woman who smoked cigarettes, especially out of doors, was taking a stand in favor of women's rights. During the 1920s, the tobacco market soared, particularly among women. Popular brands of cigarettes included "Chesterfield," "Lucky Strike," "Old Gold," "Camel," "Raleigh," and "Marlboro." The Phillip Morris tobacco company began marketing the Marlboro in 1924 as a woman's cigarette that was as "Mild as May." Smoking rates among female teenagers tripled between 1925 and 1935.

With the introduction of the Pall Mall brand in 1939, the American Tobacco Company became the largest tobacco company in the United States. During World War II (19391945) the sale of cigarettes was at an all-time high. Tobacco companies sent millions of cigarettes to soldiers for free. Cigarettes were also included in a soldier's C-Rations. When the soldiers returned home from abroad, the tobacco industry had a steady stream of loyal customers. The cigarette culture was actively promoted. The main male movie stars of the age were smokers. Humphrey Bogart and John Wayne were smokers. (They also both developed lung cancer.) After World War II, the soldiers came home "hooked on cigarettes." One popular country-and-western song from the 1940s was "Smoke, Smoke, Smoke that Cigarette. . . ."

By the 1970s the two most influential tobacco companies were Philip Morris and R.J. Reynolds, with the popularity of their respective "Marlboro" and "Winston" brands. Another trend in the 1980s was the consumer interest in discount cigarettes, partly in response to the substantial increases in cigarette taxes. The 1990s saw an increasing support by the government to make tobacco companies liable for damages caused by their products exemplified in a 1992 U.S. Supreme Court decision. There also continued to be significant tax increases on cigarettes in many states, such as the 75 cents a pack tax levied by the state of Michigan. In addition, during the 1990s many businesses began to restrict or eliminate smoking in public places, in response to an Environmental Protection Agency (EPA) report in 1993 that categorized tobacco smoke as a class-A carcinogen. Increasing criticism of advertising strategies employed by tobacco companies also contributed to the decline in popularity of tobacco products.

The health risks associated with tobacco use resulted in a rise in lawsuits filed against tobacco companies in the late 1990s. Individuals sought compensation for poor health brought on by years of smoking and states asked for reimbursement on the large medical costs incurred by smoking-related illnesses. Both groups were successful and reforms were initiated. By the end of the twentieth century, the complexion of the tobacco industry in the United States was radically changed by shifting attitudes and regulations. Because of the unfavorable market conditions in the United States, companies sought to increase their sales in foreign markets, where attitudes about tobacco remained open and restrictions were more lenient.

Although tobacco had jump-started the American economy at a point when settlement was clearly costing more money than it was worth (except in the eyes of the religious dissidents of New England who merely wanted to be apart from England), and though it had helped to shape some of the fundamental characteristics of the emerging colonial American economy, the tobacco plant had also become a noxious but well entrenched part of the American culture.

See also: American Tobacco Company, Tobacco, Tobacco Trust


Breen, T.H.H. Tobacco Culture: The Mentality of the Great Tidewater Planters on the Eve of Revolution. Princeton: Princeton University Press, 1990.

Goodman, Jordan. Tobacco in History: The Cultures of Dependence. London: Routledge Press, 1994.

Hillstrom, Kevin, ed. Encyclopedia of American Industries, 2nd ed. Vol. 1: Manufacturing Industries. Detroit: Gale, 1997, s.v. "Tobacco Products."

Kluger, Richard. Ashes to Ashes: America's Hundred-Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris. New York: Alfred A. Knopf: Distributed by Random House, 1996.

U.S. Industry Profiles: The Leading 100, 2nd ed. Gale Research, 1998, s.v. "Tobacco Products."

Tobacco Industry

views updated May 21 2018

Tobacco Industry

The tobacco plant (any of the several species belonging to the genus Nicotiana, especially N. tabacum), is indigenous to the New World, where archaeological evidence indicates that it had been domesticated by 3500 bce, if not earlier. Many pre-Columbian societies smoked tobacco, often as part of religious ceremonies or in the context of ritual healing—practices that have survived into the present not only among Indian groups but also in African Latin religions such as Candomblé, Umbanda, and Santería. Early European explorers commented on the strange habit of smoking leaves, and carried samples of tobacco back across the Atlantic. The commercial potential of the plant became apparent only from the end of the sixteenth century onward, when snuff and pipe smoking gained widespread popularity in Europe and then in Asia and Africa. Thereafter, tobacco quickly became a major staple in the colonial export trade.

One of the first New World colonies to export tobacco was Brazil, where, in the seventeenth century, the northeastern captaincy of Bahia emerged as the main center of production. Bahian farmers specialized in twist tobacco (tobacco tightly woven into ropelike cords, appropriate for both pipe smoking and chewing). The mixture of molasses and herbs that farmers brushed onto the finished twists gave them a distinctive and much appreciated flavor. There were two main markets for Bahian tobacco: Portugal took the better twists (often for reexport) while tobacco judged lower in quality was shipped to West Africa, where it soon became a highly prized trade good used in bartering for slaves. As the slave trade grew, so too did the volume of exports to West Africa. Tobacco was thus crucial to the development and growth of slave-based agriculture and mining in colonial Brazil.

The years following Brazil's independence (1822) brought a serious decline in the Bahian tobacco trade. Independence by itself weakened established links, through Portugal, to markets in northern and southern Europe. At the same time, British efforts to halt the importation of slaves hampered trade with West Africa. Changing fashions also contributed to the decline. European consumers increasingly preferred cigars (and later cigarettes) to snuff and pipe tobacco. The decline was reversed after 1840, when Bahian growers began to harvest varieties of leaf tobacco that could be used in manufacturing cigars.

A significant export trade in tobacco also developed in colonial Spanish America and most notably in Cuba, where the seventeenth-century surge in European demand encouraged increased production at first near and around Havana and then throughout the island. The real heyday of Cuban tobacco was, however, the nineteenth century, when, paradoxically, sugar had already displaced tobacco as the island's most profitable export. The rapid development of the sugar industry in Cuba, from about 1760 on, had come at the expense of tobacco: in one district after another, vegas (tobacco farms) had been replanted with cane. Only in the western and eastern extremes of the island and at a few scattered points in between did tobacco hold its own. Yet from these regions (especially the famous Vuelta de Abajo in western Cuba) came leaf tobacco that was ideally suited for cigars. As early as the 1820s, English consumers eagerly sought out hand-rolled "Havanas." Cigar exports more than doubled between 1840 and 1855. Thereafter, sales of unprocessed leaf quickly outstripped the trade in finished cigars.

At various times, other regions in Latin America have also produced tobacco for export: colonial Venezuela on a small scale, Colombia and Paraguay in the nineteenth century, and, from the end of that century onward, Mexico, Puerto Rico, and the Dominican Republic.

Moreover, tobacco early on became an important commodity in local and regional commerce. By the eighteenth century, one third of the Bahian crop was sold within Brazil. Regional markets absorbed virtually all the tobacco grown in colonial Colombia and Paraguay. In the late eighteenth century, local production as well as imports from Cuba helped meet the enormous demand for tobacco in Mexico, the wealthiest and most populous of Spain's American colonies.

The tobacco sold in domestic and foreign markets frequently came from small and medium-size farms. Tobacco was in many ways an ideal cash crop for the small holder. Although labor intensive, it required neither great amounts of land nor any large outlay of capital. Yet, more often than is commonly acknowledged, tobacco production in Latin America depended on onerous sharecropping arrangements or on coerced labor. Slaves accounted for at least a third of the population in the tobacco districts of colonial and nineteenth-century Bahia, where well-to-do growers typically owned a dozen or more slaves. As late as 1862, more than 17,000 slaves still worked on tobacco farms in Cuba. At the end of the nineteenth century, tobacco growers of Oaxaca, in Mexico, were notorious for relying on a particularly harsh form of debt peonage.

The tobacco trade has long been subject to various restrictions and controls. During the colonial period, many of those restrictions were linked to the creation of Estancos (royal monopolies). The Portuguese estanco, established in 1659, handled the sale and distribution of Brazilian tobacco in European markets. On its behalf, colonial authorities enforced numerous laws that governed warehousing, prices, and quality controls. The first Spanish estanco lasted only a few years (1717–1724), but a second estanco, organized in the 1760s and 1770s, became a major source of revenue for the crown. It monopolized both exports and sales of tobacco within the colonies. To keep prices high, the estanco attempted to limit output. The imposition of these controls met with resistance: merchants turned to smuggling, and growers rebelled in Cuba in 1717, 1720, and 1723, and in Colombia in 1781. After Independence, financial necessity led several Spanish American governments to reestablish state tobacco monopolies, which survived until the mid-nineteenth century. In the twentieth century, both Mexico and Cuba granted monopoly privileges to state-owned tobacco companies.

Tobacco also has links to the early history of manufacturing and industry in Latin America. In the 1790s, as many as 8,900 workers—more than half of them women—were employed by the Spanish estanco at its cigar and cigarette factory in Mexico City. By the 1850s, both slaves and wage workers manufactured cigars and other tobacco products at numerous workshops and factories in Bahia and Rio de Janeiro. Several hundred workshops competed with larger factories and domestic manufacturing in Cuba's nineteenth-century cigar industry. In the 1860s the Susini firm of Havana pioneered mechanization in the production of cigarettes. By 1900, the tobacco industry in both Cuba and Brazil had already begun to attract foreign investment. However, in 1959, the revolutionary government of Cuba expelled all foreign business. In turn, the United States banned the importation of all Cuban goods, including cigars. Today, large foreign firms dominate the sector in Latin America, where tobacco remains a widely cultivated cash crop.

While smoking continues to be popular in Latin America, there has been increased attention to the negative health effects of tobacco products. For instance, in 2002 Mexico's health secretary announced that the government would ban tobacco advertisements on radio and television.

See alsoAgriculture; Bahia; Slavery: Brazil; Tobacco Monopoly.


Fernando Ortíz, Cuban Counterpoint: Tobacco and Sugar (1947).

Catherine Lugar, "The Portuguese Tobacco Trade and Tobacco Growers of Bahia in the Late Colonial Period," in Essays Concerning the Socioeconomic History of Brazil and Portuguese India, edited by Dauril Alden and Warren Dean (1977).

Arturo Obregón M., Las obreras tabacaleras de la ciudad de México (1764–1925) (1982).

Jean Stubbs, Tobacco on the Periphery: A Case Study in Cuban Labour History, 1860–1958 (1985).

Susan Deans-Smith, Bureaucrats, Planters, and Workers: The Making of the Tobacco Monopoly in Bourbon Mexico (1992).

Additional Bibliography

Barickman, B. J. A Bahian Counterpoint: Sugar, Tobacco, Cassava, and Slavery in the Recôncavo, 1780–1860. Stanford, CA: Stanford University Press, 1998.

Escobar Gamboa, Mauro. El tabaco en el Perú colonial, 1752–1796. Lima: Seminario de Historia Rural Andina, Universidad Nacional Mayor de San Marcos, 2004.

González Gómez, Carmen Imelda. El tabaco virreinal: Monopolio de una costumbre. Santiago de Querétaro, México: Fondo Editorial de Querétaro, 2002.

                                    B. J. Barickman

Tobacco Industry

views updated May 11 2018

Tobacco Industry




The tobacco industrys main tobacco products are smoking tobacco (including cigarettes, cigars, and pipe tobacco), chewing tobacco, and snuff. The use of cigarettes as a means of consuming tobacco is relatively recent, beginning around the start of the twentieth century. Six states in the United States produce most of the U.S. tobacco: Georgia, Kentucky, North Carolina, South Carolina, Tennessee, and Virginia. Internationally, the United States is in somewhat of a unique position in that it is simultaneously a big tobacco-producing and a big tobacco-consuming country. On one hand, some countries, such as Malawi and Zimbabwe, produce tobacco at low costs but consume relatively little. On the other hand, the European Union (EU) and Japan are heavy tobacco consumers but relatively little tobacco is grown there. About 100 countries produce tobacco, but Brazil, China, India, Malawi, Turkey, the United States, and Zimbabwe together produce over 80 percent of the worlds tobacco. China is the biggest producer of tobacco, while the United States is the biggest tobacco exporter in the world. In 2002, unfinished tobacco and tobacco product exports contributed $1.7 billion to the U.S. trade balance (Capehart 2001).

Tobacco use across the globe remains significant. According to the World Health Organization (WHO), globally, approximately half the men and about a tenth of women smoke. Smoking in developing nations has been increasing faster than that in the developed world. Since the 1960s, governments across the world have tried to control cigarette consumption (smoking) using various measures. Most governments now have some sort of antismoking policies in place. Initially these policies were driven by concerns regarding the health of smokers, while more recently the health of nonsmokers (dangers of second-hand smoke) has also become a concern.


Generally policy makers have used both price and non-price measures to combat smoking. Whereas there is now a relatively good understanding of the effectiveness of tobacco control policies in developed nations, understanding of the effectiveness of such policies in developing nations is not so good. In addition, smoking behaviors of different population subgroups are slowly being understood. Price measures are primarily based on reducing smoking using higher cigarette prices driven by higher taxes. The responsiveness of cigarette demand to cigarette tax increases is at the heart of how effective tax-based smoking control policies can be. The effectiveness of price measures, however, may be limited by the habit-forming nature of cigarettes and their low price responsiveness of demand. Conversely, demand unresponsiveness provides greater opportunities for tax revenue generation by governments. Relatively speaking the few studies of developing countries have largely found a higher demand responsiveness implying that dollar-for-dollar, there may be greater smoking reduction opportunities in developing nations than in developed countries (Jha and Chaloupka 2000; U.S. Department of Health and Human Services 2000). Nonprice smoking control measures include numerous initiatives such as cigarette advertising bans (Saffer and Chaloupka 2000), health warnings on cigarette packages, and territorial restrictions (such as workplace and public-place smoking bans and restrictions on sales of tobacco products to minors).

In 1964 the U.S. Surgeon General issued a report warning about the negative health effects of smoking. While the United States was at the forefront of legislating smoking-related health warnings beginning in 1965, other countries have since enacted more restrictive requirements. There has been a ban on the broadcast advertising of cigarettes in the United States since 1971. In 1998, forty-six states in the United States and the key cigarette/smokeless tobacco products producers signed a master settlement agreement (MSA) to reimburse states for costs imposed due to negative health effects of smoking. The main provisions of the MSA include cash payments to the states, advertising restrictions, support for antismoking measures, and disbanding of tobacco-industry trade organizations. Payments were also to be made to tobacco growers to compensate them for the decrease in the tobacco demand (Capehart 2001; Viscusi 2002). In 2003 the WHO drafted a framework convention on tobacco control that included numerous restrictions on the sale and marketing of tobacco products.


The extent of the effectiveness of these policy measures remains to be seen. Further, in spite of the stringent restrictions imposed by the various measures, technological advances, especially the spread of the Internet, make it virtually impossible to effectively regulate the marketing and sale of tobacco products. Effectiveness may be improved by comprehensive tobacco control policies in which lawmakers pay attention to consumption substitutability among tobacco products as more effective control policies are enacted on one product. At the macro level policy makers face the dilemma of replacing export revenues generated by tobacco products with other revenues. So how can curbs on domestic sales of tobacco be reconciled with encouragement of tobacco exports? The long-term future of the tobacco industry seems somewhat uncertain given all the attention and resources being devoted to smoking control. However, the habit-forming nature of their products, huge industry cash reserves, and the ability to launch newer tobacco products seem to promise a very long tobacco-control road.


Capehart, Thomas C. 2001. U.S. Tobacco Industry Responding to New Competitors, New Challenges. Amber Waves: The Economics of Food, Farming, and Natural Resources, and Rural America. U.S. Department of Agriculture, Economic Research Service.

Chaloupka, Frank J., and Kenneth E. Warner. 2000. The Economics of Smoking. In Handbook of Health Economics Vol. 1, eds. Anthony J. Culyer and Joseph P. Newhouse, 15391627. Amsterdam: Elsevier.

Gallet, Craig A., and J. A. List. 2003. Cigarette Demand: A Meta-Analysis of Elasticities. Health Economics 12 (10): 821835.

Jha, Prabhat, and Frank J. Chaloupka. 2000. Tobacco Control in Developing Countries. Oxford: Oxford University Press.

Saffer, Henry, and Frank J. Chaloupka. 2000. Tobacco Advertising: Economic Theory and International Evidence. Journal of Health Economics. 19 (6): 11171137.

U.S. Department of Health and Human Services, U.S. Public Health Service. 2000. Reducing Tobacco Use: A Report of the Surgeon General. Washington, DC: U.S. Government Printing Office.

Viscusi, W. Kip. 2002. Smoke-Filled Rooms: A Postmortem on the Tobacco Deal. Chicago: University of Chicago Press.

Rajeev K. Goel

tobacco industry

views updated May 21 2018

tobacco industry. This originated in the 16th cent. and was attacked by James I in his Counterblaste (1604). Yet smoking spread, and snuff-taking became fashionable. There were three products, cut tobacco for pipes, roll tobacco for chewing and smoking, and snuff. The cost of entry to the industry increased and by 1840 it was beginning to concentrate in large towns. Mass production of manufactured tobacco was made possible by Robert Legg, the inventor of the automatic cutting machine (1853). Among the upper classes cigars became popular in the 1840s and late in that decade cigarettes were first introduced. Cigarettes became popular with servicemen during the Crimean War, and their production greatly expanded after 1856. Light yellow tobacco, produced in Virginia, commonly replaced Turkish tobacco in handmade cigarettes by 1860. The introduction of the Bonsack machine (1881) led to the mass production of cigarettes and was adopted by Wills, the leading company in the tobacco industry. Wills formed the Imperial Tobacco Company in 1901 by merging the leading British manufacturers. Since 1960 medical evidence of the effects of addiction and the correlation between smoking and lung cancer has clearly hit domestic demand, but the industry has developed extensive markets overseas.

John Butt