Tobacco has traditionally occupied a favored position in state taxation systems because of its popularity and high levels of consumption. Spain monopolized its domestic tobacco trade as early as 1636, and extended a government monopoly over the tobacco trade of its American possessions between 1717 and 1783. The organization and administration of the tobacco monopolies were virtually uniform throughout the empire, although the degree of state regulation varied. In Mexico, the state eventually took over all aspects of the domestic tobacco trade, from the cultivation and purchase of leaf, to manufacture of cigars and cigarettes in state-managed factories, to marketing by government-licensed stores. In comparison, in Cuba and Venezuela the monopoly managed the cultivation and production only of the varieties of raw leaf tobacco that grew in these colonies and were exported to Spain for processing as cigars, cigarettes, and snuff.
The tobacco monopoly proved to be a critical source of government income both in Spain and throughout its empire. Revenues earned from the tobacco monopoly in Spain accounted for almost one-third of total domestic public revenues. Combined, the tobacco monopolies of Spanish America at their peak made significant contributions to crown revenues, representing the second greatest source of revenue after silver and gold. In addition, throughout the eighteenth century monopoly revenues played an increasingly important role in the financial and fiscal affairs of the colonies, which suffered from shortage of specie and lack of formal banks. Historians differ on the economic costs to the colonies of the tobacco monopolies: some argue that they resulted in capital exports and the reduction of capital stock, while others argue that monopoly restrictions redirected resources into other activities. The tobacco monopoly performed better in Mexico than in Peru, where in 1791 the factory system was closed and returned to private control. The Peruvian monopoly still maintained control of actual plant production until the end of Spanish rule.
Recent research suggests that the political and social consequences of Spain's monopolization of the tobacco trade varied, as did the effectiveness of monopoly policy, the variations being explained by the strategies adopted to implement the monopoly, the structure of the local society and economy, and alternative sources of employment. Responses ranged from contraband in tobacco leaf and products, to riot and rebellion by disgruntled farmers and peasants. One of the most extreme examples of opposition to the imposition of a tobacco monopoly is the Comunero Revolt in 1781 in New Granada (Colombia). The social dimensions of the monopoly have recently attracted the attention of historians who emphasize the tobacco monopoly's impact on labor and working conditions, gender roles in the workplace, and the changes engendered in rural society as a result of monopoly policy. Much more research, however, is needed in these areas.
After the colonies declared their political independence from Spain, restructuring of tobacco cultivation, manufacturing, and marketing occurred. Although monopolies were legally abolished, many continued to exist as penurious governments desperately sought revenues. The difficulties of re-creating the colonial-style monopolistic structure manifested itself in the cycles of abolition of a tobacco monopoly, by reestablishment, only to be succeeded by abolition throughout the nineteenth century, although in Colombia, for example, the monopoly facilitated the development and expansion of the tobacco export trade. A major influence on the structure of the tobacco trade and industry in the late nineteenth and twentieth centuries came from monopolies in Europe and the United States, such as the British-American To bacco Company, a consequence of which was the consolidation of, and division of business between, tobacco-exporting and tobacco-manufacturing countries.
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