History of Tobacco

Origin• 1st encounter:– Christopher Columbus – Oct 14, 1492

• Native to Americas– Desert Southwest– Slopes of Continental

Pacific side of mountains

– Central and South America

• Andean slopes

• Old world pipes for Cannabis not tobacco

•Named from Y shaped tubeTabago used for Inhalation of tobacco powder

Native Wild Tobacco Species

Native Wild Tobacco Species

Botanical• Genus Nicotiana

– 66 species– Named for Jean Nicot

• Physician & Scientist• Origin of Nicotine• Introduced rustica to France in 1560

– Use• Great Lakes Indians

– Smoked in Calumets– Stems of Peace Pipes

–Rustica•Small leaves•Harsh smoking tobacco•Historical movement

– Mexico– Pacific area – Across US

Tabacum• Large leaf• Milder, richer taste• Historical movement

– Eastern Andean Piedmont» Ecuador» Peru

– Cuba– Venezuela– Panama

Tabacum

• Foundation for modern tobacco

• Not found in nature

• Introduced to France– From Brazil– By Jean Andre Themet

• Physician & Scientist

Uses• Medicinal– Purgative– Worms– Toothaches– Disinfectant

• Cuts• Bruises

– Bites• Snake• Spiders• Insects• Lice

– Poultices• Chest colds• Boils• Internal

infections• Inflammations

– Toothpaste– Painkiller– Appetite

Suppressant

•Religion–Fasting–Mystical & Prophetic

•Smoking–Rolled like modern cigar

»Looked like large cricket, cigarra» Cigarette is French

Tobacco in the United States• Pipes

Suggest use 4-5000 years ago

Large bird pipe found near Newtown Pike

Disk pipes

Calumet• Peace Pipe• From Calumeau meaning reed• Sacred stem • Unimportant bowl

Tobacco in the United States• Cultivation

– Prior to arrival of Europeans– Cave and Cliff Dwellers of Central &

Eastern Kentucky– Mound builders– Cherokee, Shawnee, Choctaw &

Chickasaw• Rituals

– Pouches or gourds around neck– Mixed with other things

» Narcotics» Hallucinogens» Psychoactives

Tobacco in the United StatesModern use

• Proliferation in 16th & 17th Century– Maryland– Burley

• Widely established in little more than a century• 1600’s

– Ravenous appetite for N. tabacum in England– English settlers established Jamestown in 1607

• Spain held monopoly• Natives using rustica• John Rolfe illegally acquires seeds of tabacum from Cuba• Tobacco flourishes and becomes foundation of economy

Tobacco in the United StatesExport to England– 20,000 lbs in 1618– 24 million by 1664– Production spread

• Maryland• Pennsylvania• The Carolinas

Tobacco attacks– Sensual indulgence– Dirty habit– Doctors tried to restrict to medicinal uses only– King James I

• Vocal critic• Counterblaste to Tobacco

– Vile, obnoxious weed

Economic Benefits• Revenues

– Price reached 1974 equivalent of $500/lb – Taxes

• Per hogshead tax• Increase weight per hogshead from 600 lb

to 1000 to 1300 range

– Customs– Excise duties

Tobacco in KentuckyEarliest report– John Finley– Shawnee near Spring Station (near Midway,

Woodford Co)– 1752

• Subsistence level during early settlement• Excesses by 1780’s• Exports

– Isolation– By river

• Indians• Pirates• Changing river channels• Water levels• Spanish customs

James Wilkinson

• Arrived in Lexington 1784– Highly ambitious– Not overly scrupulous

• Founded Frankfort– 1786– Used Kentucky River to

ship tobacco

Established Flotilla for tobacco & other goods

– Flat Boats– Left Frankfort April 1787 bound for New

Orleans – Good seized at Natchez– Had cargo released through secret

meeting – Paid entry duty at New Orleans– Sold crop

Monopoly Established• 1788 Ports opened to any who paid entry fee• 1790

– 250,000 lb sold – Price

• $9.50 to $10 /100 wt in New Orleans• $2.50 in Kentucky

– Farmers organize own convoy– Spanish limit western leaf to 40,000 lb– Excess reaches New Orleans illegally

Early History 1700’s• 1795

– Port declared duty free through treaty with Spain

• Reached totals of 100 million pound

• Decline– By late 1790’s

Early 1800’s• Decline continues

– Low of 4 million by 1814

• Bright Leaf Tobacco– Discovered in 1839– Slave named Stephen

• Fell asleep due to heat of wood fire in barn• Awoke to find fire almost out• Placed charred logs to revive fire• Dry heated turned tobacco bright yellow

• Philip Morris, Esq.– Tobacconist and importer of fine cigars– Opens shop on Bond St. in London - 1847

Burley

• Prior to 1864– Dark air-cured tobacco

• Stand Up• Rainbow White• Red Twist Bud• Little Burley• Red Burley

White Burley • Spring of 1864

– George Webb & Joseph Fore• Tenant on Captain Fred Kautz

Farm• Brown Co., Ohio• Near Higginsport• Ran low of seeds for sewing

beds• Bought extra seeds from

George Barkley• Bracken Co., KY• Transplants looked unusual• Destroyed plants

– 1865• Sewed unused seeds from

previous year• Grew to harvest & cured leaf

– Plant characteristics• Pale green

• Creamy stalk

• White veins

– Cured leaf• Fine, light texture

• Smoked bitter

• No heavy load of sugars

– Saved seed from 1865 crop

– Produced 20,000 lbs– High price at Cincinnati

market– Attracted attention

1866• St. Louis Fair & Exposition

– First and second prize for fine cutter leaves

– $58/ 100wt

White Burley Advantages

• Did not have to be primed• Stalk cut & air cured quickly• Well suited to uptake of flavoring• Found its may into cigarettes

– Improvement in quality– Kentucky becomes No. 1

• Surpassing Virginia• Maintained No. 1 Ranking till 1929• Surpassed by North Carolina

Tobacco Companies

The American Tobacco Co.– Formed By J.B. Duke

• President of W. Duke & Sons• From five companies

– Called the Trust– Over 250 companies swallowed by Trust by

Late 1800’s – Ruthless price wars– Reduced prices to farmer

• 1-3 cents per pound• 8-12 cents per pound previous

Philip Morris & Co.

• 1901

• Appointed by royal warrant as tobacconist for King Edward VII

Formation of The Association• Formed in 1904• To force better prices• Black Patch Area of Kentucky & Tennessee• 70% of growers joined• Guerrilla-like tactics used from 1906-1908

– Nightriders– Spread to burley region– Targeted the Trust– Change in sentiment against Nightriders– Federal lawsuits

Trust Holdings by 1910

• 86% of cigarettes

• 85% of plugs

• 76% of smoking tobacco

• 80% fine cut chew

• 96% snuff

• 91% little cigars

• 14% of cigars

Sherman Antitrust Act

• Trust in violation 1911

• Broken into big four– American Tobacco Co.– Liggett and Myers– Lorillard– R.J. Reynolds

R.J. Reynolds• Introduced new type of cigarette containing

all types used in other brands in 1913– Turkish– Virginia & North Carolina Bright Leaf– White Burley

• Camel– Marketed in 20 cigarette packs like expensive

brands– Sold for 10 cents– Market share

• 20% by 1915• 45% by 1922

The Burley Tobacco Growers Association

• Formed in 1920 – Poor crop– Low prices

• Lasted only 5 years– Members failed to renew pledge

Philip Morris

• 1929

• Purchases factory in Richmond, Virginia

• Begins manufacturing its own cigarettes

Agricultural Adjustment Act

• Began 1933

• Set acreage & loan rates

• Amended in 1938– With further restriction

The Burley Tobacco Growers Cooperative Association

• Began in 1941

• Called “New Pool”

• New allotments formed to control production

Referendums to control production

• 1955, 25% cut due to surplus

• 1960– Price support levels frozen at 1959 level– Subsequent years with adjustment for

increased expense

1963

• Bumper crop • 755 million pounds• Reduced allotment

– 10% in 1964– 10% in 1965– 15% in 1966– 1966 & 1967

• Failed to shift control from acreage to poundage

– 1970 • Allotments cut by 10%

1971

• New program

• Limits– Acreage– Poundage

• 1975– Acreage dropped

US Government Action • 1964

– Surgeon Generals Report

• 1981– Companies told farmer that they could not

grow enough to supply demand

• 1982– Farmer overproduced– No-Net-Cost Tobacco Program Act

• Not cost to general public

1983

– Severe drought – Record low yields– Poor quality

1985• Tobacco Improvement Act

– Reduced Prices– Established new formulas for production control

• Company release buying intentions by Jan 15• 5 year average of exports• Pool stocks

– Set prices increase• 2/3 based previous 5 years• Throw of highest & lowest • 1/3 based on increased in production costs

– Established a buy-out of pool stocks by companies

1986-1994• 1986-1989

– Short supply– One price market– No distinction for quality– Producer strip in fewer grades

• 1992– Surplus supply

• 1994– Surplus buy down by Companies– One of best crops grown in Kentucky fields– Poor curing year

1995, 1996 & 1997• 1995

– American Tobacco Company merges with British American Tobacco

• 1996– 29% increase in quota– High world demand

• 1997– Wet start– Dry finish– Poor cure

• Green tobacco• Fat stems• Would not cure• Bled onto lamina• Black tobacco• Poor quality

Master Settlement Agreement November 23, 1998

• Signed by representatives of 46 states, Puerto Rico, the U.S. Virgin Islands, American Samoa, the Northern Mariana Islands, Guam, the District of Columbia, the Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, Philip Morris Incorporated, R.J. Reynolds Tobacco Company, Commonwealth Tobacco, and Liggett & Myers. 

1998-2000

• 1998– Average season– Poor yields

• 1999– Quota cut 29%– Little effect due to high effective quota– Japan Tobacco Inc. purchases RJ Reynolds'

international tobacco operations

2000 – 2001• 2000

– 45.3% quota cut– Philip Morris announces Partnering Program– Star Scientific

• Bulk curing• Low nitrosamines

• 2001– Reduction in quota– Change in regulation to allow only 10% carry

forward– Vector Tobacco

• grows low nicotine burley crop• Illinois, Iowa, Mississippi, Louisiana, & Pennsylvania

2002 - 2003

• 2002– Reduction in quota

• 2003– Reduction in quota– Wet season– Low yields– Production short

Grower’s Law Suit -2003

• D. LAMAR DELOACH, et al. – Companies unlawfully agreed and conspired to

restrain competition and fix prices for and allocate domestic flue-cured and burley tobacco sold at tobacco auctions in the United States, and engaged in other unlawful conduct to stabilize prices of tobacco at levels below those that would have existed in a competitive market.

– Defendants caused the quota under the federal tobacco program to be depressed.

2004

• 10% rule applies for the first time– Farmers loose more than half of quota carry

forward

• R.J. Reynolds Tobacco Company and Brown & Williamson merge as Reynolds American, Inc.

• Buyout has best chance of passing

• Heavy blue mold pressure

• Poor root development