Unit 1:
History & Economics of Tobacco

Title Page

Introduction

Unit 1
What is Tobacco?

History of Tobacco

Economics of Tobacco

Reading & Writing Activities: Finding Important Facts/Details

Unit 2

Unit 3

Unit 4

Unit 5

Unit 6

Bibliography

Economics of Tobacco

Economics deals with the making and selling of products and services to consumers. Products are things like chewing tobacco, cigarettes, televisions, houses, and cars. Services include medical care, education, and insurance. Consumers are the people like ourselves who buy or receive the products and services.

The U.S. has a capitalist economic system. Under this system, one or more people get together and form a company to make and sell something. They do this to make money. The money that they make after paying off their bills or expenses is called profit. In other words, a profit is the money they have for themselves after paying rent, salaries, utility bills (electricity, gas, telephone) and buying machines/computers and any other equipment they need to make their product and run their business.

When companies sell more than they spend, they make a profit. Selling their products to other countries is called exporting. The product that is sold is called an export. Buying from other countries is called importing, and what U.S. companies buy is called an import. For example, if Ford Motor Company buys steel from Japan to make a car, it is importing a product. Steel is the import. When Ford sells its cars to Brazil, it is exporting. Cars are the exports.

When companies or governments export more than they import, they have a trade surplus. A trade surplus is another way of saying a profit. On the other hand, when they import more than they export, they have a trade deficit. A deficit means a debt or money owed to someone else.

Throughout history, tobacco companies have had a trade surplus. That is one big reason why they have been important to the economy of the U.S. In 1992 the tobacco industry reported a $5.65 billion dollar trade surplus. In the first half of 1992, tobacco exports were $2 billion more than imports. The taxes that the tobacco companies pay provide a lot of money for the U.S. government. In 1992, Philip Morris alone paid $4.5 billion in taxes. This makes it the largest tax payer in the U.S.

Credit: Copyright © 1994 by The New York Times Company. Reprinted by permission. "How Do They Live With Themselves?" Roger Rosenblatt, The New York Times Magazine, 3/20/94

Tobacco companies export their products (cigarettes, cigars, chewing tobacco) to at least 146 countries around the world. They sell to Hong Kong, Saudi Arabia, United Arab Emigrates, Turkey, South Korea, Singapore, China, Russia, and many more countries. In 1992 Philip Morris sold 11 billion cigarettes to Russia alone.

One of the reasons tobacco growing is so profitable is because its costs are so low. There are only about 800,000 people working in the tobacco industry. There are 136,000 tobacco farms in more than 16 states.

Tobacco Acres Harvested by State in 1991

State

1991 Acres

Connecticut

1,750

Florida

6,700

Georgia

40,000

Indiana

7,200

Kentucky

223,150

Maryland

7.400

Massachusetts

480

Montana

3.000

North Carolina

274,000

Ohio

1,0,500

Pennsylvania

10,500

South Carolina

51,000

Tennessee

61,700

Virginia

53,600

West Virginia

1,800

Wisconsin

7,400

United States

761,080

Credit: Dr. Joel Dunnington, Tobacco Almanac, Revised, May 1993

The making or manufacturing of cigarettes is almost completely automated. It is done by machines without people. Machines crush and clean tobacco leaves and add chemicals like nicotine. They also roll cigarettes, put on filters, cut them to length, and then package them.

All of the six U.S. companies producing cigarettes are large and powerful. They are so strong that not even all the medical reports of the health dangers of smoking and all the laws restricting smoking and advertising have been able to weaken them. They are still able to make big profits by buying up other non-tobacco companies in the U.S. and by selling and making cigarettes outside the country. For example, Philip Morris bought Miller Beer and Kraft General Foods, and R.J. Reynolds bought the Nabisco Food Group and General Entertainment Corporation.

Tobacco Companies: The Companies They Own & The Products They Make

Philip Morris

Bird's Eye

Louis Kemp Seafood

Jello

Louis Rich Meats

Light 'n Lively

Kool-Aid

Crystal Light

Lender's Bagels

Kraft

Minute Rice

Oscar Mayer

Tang

Post Cereals

Claussen Pickles

Lowenbrau

Stove-Top

Log Cabin

Country Time

Millers Beers

Maxim Coffee

Maxwell House

Shake and Bake

Baboli Bread

Seven Seas

Miracle Whip

Louis Rich

Cool Whip

Milwaukee's Best Beer

Sharp's Beer

Bulls Eye Sauce

Knudson

Meister Brau Beer

Parkay Margarine

Capri Sun

DiGiorno Pasta

Food Club

Entenmanns

Sealtest Ice Cream

Bakers Chocolate

Chiffon

Richmix Candy

Breyer's IceCream



Brooke Group (formerly Liggett & Myers)

MAI (computers, information systems)

NBA Hoops (baseball cards)

Basic Four

LineDrive Pre-rookie(baseballcards)

Distributor of football & hockey cards

Marvel superhero cards

GI Joe cards

World Championship Wrestling cards

Terminator II movie cards

Disney cards

NFL Proline Portraits

1992 Olympic cards

Star Trek

X-men

Full House

Perfect Strangers

Family Matters

DC comic book characters



Lorillard

Loews Hotels

Loews Theatre Management Corp.

CNA Insurance Co.

Bulova Corp. (watches, clocks)

Diamond M. Offshore Drilling

Majestic Shipping Corp,

Regency Hotel, New York

Summit Hotel, New York



R. J. Reynolds
RJR Nabisco Products (non tobacco)
Annual Report 1991

cookies -

Almost Home Family Style Cookies

Bakers Bonus Oatmeal Cookies

Lorna Doone

Barnum's Animal Crackers

Bugs Bunny Graham Crackers

Cookie Break

Biscos

Cameo

Chips Ahoy

Cookies 'N Fudge

Heyday

Ideal

Made 'em Myself

Mallomars

Mystic

National Arrowroot

Nilla Wafers

Nutter Butter

Social Tea

Suddenly S'mores

Teddy graham

Newtons

Oreo

Pinwheels

crackers -

American Classic

Better Cheddars

Cheddar Wedges

Chicken in a Biskit

Crown Pilot

Dip in a Chip

Harvest Crisps

Honey Maid

Nips

Oysterettes

Premium

Ritz Bits

Royal Lunch

Sociables

Swiss Cheese

Twigs

Uneeda

Vegetable Thins

Wheatsworth

Wheat Thins

Zings

Tid-Bit

Graham Cracker:

Oat Thins

Ritz

Triscuit

Waverly

cereals -

Nabisco 100% bran

Shredded Wheat

Team

other products -

Comet Cups

Doo Dads

Easy Cheese

Mister Salty Pretzels

Mr. Phipps Pretzel Chips

Mr. Phipps Dips

NAB Packs

Cracker Meal

specialty products -

A1 Steak Sauce

Brer Rabbit Syrup

College Inn

Cream of Wheat

Davis Baking Powder

Milk bone

Grey Poupon Mustard

Ortega Mexican Food

Regina Wines & Vinegars

Royal Gelatins

Fleischmann's Egg Beaters and Margarines

My T Fine

Blue Bonnet Margarine

Cream of Rice

Canada Products -

Aylmer

Christie

Coronation condiments

Dad's cookies

Del Monte

Harnois Cookies

Ideal Canned Vegetables

Magic Baking Powder

Milk bone

Nabisco Cereals Peek Freans

Red Oval Farm

Royal Rose Vegetables

Nabisco Int. -

Anselmi Cookies

Aurora Gelatins

Bubble Yum

Chips Ahoy

Del Monte

Famosa

Fleischmann

Gloria Milk Products

Honey Bran Cracker

Konitos Cookies

Lifesavers

Martinson

Oreo Cookies

Pepito Bubble Gum

Planters Snacks

Portenas

Premium Crackers

Ritz Crackers

Royalina

Saroma

Snuki

Universal

Cameo

Fiesta

Kraker Bran

Omega Bun

Pommy

Royal Gelatins

Trakinas

Planters Div. -

Planters Nuts and snacks

Lifesavers Div. -

Lifesavers

Gummi Savers

Breath Savers Mints

Breath Savers Mints

Carefree Sugarless Gum

Beechnut Gum

Bubble Yum Gum

Fruit Stripe Gum



American Brands

Franklin Life insurance

British Navy Pussers Rum

Jim Beam

Kamchatka Vodka

Ron Rico Rum

The Claymore

Wolfschmidt Vodka

Crawfords

Gilbey's Gin

Tomintoul-Glenlivet

DeKuypen Schnapps

Old Fettercairn

Windsor Canadian

Vladivar Vodka

Whyte and Mackay Scotch

Moen Faucets

Lord Calvert Whiskey

Touch Control

LeRoux Brandy

Chicago Specialty

Kessler Whiskey

Dearborn Brass

The Dalmore Scotch

Hoov-R-Line

Gilbeys Vodka

Anchor Brass

Old Grand Dad

AristoKraft Cabinets

Kamora

Decora

ACTUA

Soft-Joys Shoes

Masterlocks

STA-SOF Gloves

Waterloo Toolboxes

Weather SOF Gloves

Craftsman Toolboxes

Doland and Aitchinson Optics (UK)

All American

Acushnet Rubber Products

Swingline Staplers

Golden Belt - Cigarette Filters

Pocket Day-timer

Prestige Pressure cookers

ACCO Staples

Dexter Locks

ACCO paperclips

Wilson Jones Pads and binders

Perma Products

Kensington Microwave Computer Access.

Vogel Peterson

ACCO data

Eastlight (UK)

Rexel (UK)

Sasco (UK)

Twinlock(UK)

ValRex (France)

King-Mec (Italy)

Office Products International (Australia)

Marbig-Rexel (Australia)

Hetzel (Germany)

Titleist Golf Balls and Accessories

Foot-Joy Golf

Titleist lrons

Pro Trajectory Clubs

Classics Golf Shoes



Brown & Williamson

Appleton Papers Inc.

Saks Fifth Ave.

Marshall Field's

Ivey's

Breuners

Farmers Group Inc.

Credit: Dr. Joel Dunnington, Tobacco Almanac, 1993

We can see the power of the tobacco companies by reading about what happened to Greg Louganis, an Olympic diver.

The Greg Louganis Story

The U.S. government and the tobacco companies help each other. Since 1964 all the Surgeon Generals of the U.S. have talked and written about the health dangers of cigarettes. Still, cigarettes are made, advertised, and sold. The tobacco industry gives thousands of dollars to help cover the costs of political campaigns of people running for political office. These are people who want to be elected or reelected as Senators, Representatives, Vice-President, and President. In turn the politicians help the tobacco industry.

One way politicians help is continuing the tobacco price support system. Under the price support system, tobacco can only be grown on a certain number of government-approved farms. The government gives farms special, low interest loans to help cover the costs of growing tobacco. The U.S. Department of Agriculture allows a certain amount of tobacco to be grown each year. This is called a quota. It also sets a minimum price for tobacco. When the farmer takes his/her tobacco to the market, any tobacco not sold one cent above the government price is bought by grower cooperatives and stored to be sold another year.

Read More:

The Greg Louganis Story

When Ronald Reagan was campaigning for President in 1980, he wrote the following letter: