The Tobacco Industry The Tobacco Industry From the beginning of time, the Tobacco plant has had a prominent impact on the lives of those involved, those involved being absolutely everyone, for smoking and chewing tobacco affects both the users and those surrounding them. While years ago, tobacco was not so much of an industry, but actually just randomly used as gifts or a simple pleasure for oneself, it certainly has become one today. This industry has greatly evolved over the years to be now one of the most prominent industries in the United States. From its history to an in depth look at its economic side, much can be learned about the tobacco industry in general. The history of tobacco in the United States can be traced right back up until the discovery of the continent by Christopher Columbus. Within a week of his landfall, Columbus had noticed the natives’ fondness for chewing the aromatic dried leaves or inhaling their smoke through a pipe.
His sailors inevitably began taking part in this custom that the Indians had become so accustomed to. Even though Columbus scolded his men for sinking to the level of the savages, for he foreshadowed both the delight and danger that may have come from the plant, tobacco spread throughout the globe, and was eventually recognized as being one of the treasures of the New World, along with coffee, chocolate, and cane sugar. In the 1850s, Philip Morris, a London tobacconist, catered to English smokers who picked up smoking after trying French and Turkish cigarettes during the Crimean War. Once the 1900s rolled around, American Tobacco Co. founder Buck Duke managed a small group of lawyers, lobbyists, and others who appealed to the pocketbooks of legislators being asked to crack down on cigarettes. Also during this time period, three members of the key Senate Finance Committee were found to have owned tobacco stock, including its chairman, Nelson W. Aldrich of Rhode Island, who holds stock worth more than one million dollars.
Four years later, when Congress passed the Pure Food and Drug Act, Senator Aldrich and other federal lawmakers did Buck Duke’s bidding. Although no other ingested product is subject to heavier processing, more additives, or as many known or suspected toxins, tobacco was egregiously excluded from regulation. The industry has since argued that tobacco is neither a food nor a drug, and was thus properly exempted. In 1902, after succeeding McKinley as president, Theodore Roosevelt initiated more than forty anti-trust actions directed at, among others, Standard Oil, DuPont, Union Pacific, and the American Tobacco Co. Buck Duke testified in federal court, saying that every deal he ever made was intended not to destroy competition but only to round out his own company and to get out fair share of the trade. However, in 1911, the Supreme Court ruled against American Tobacco. American Tobacco thus broke up and the other components reassembled in smaller units.
R.J. Reynolds emerged as the strongest competitor of these resulting companies. Duke, who became very morose and had begun drinking heavily, earned the high regard of posterity by turning to philanthropy. He endowed Trinity College with the money to become a university of nation rank when the school agreed to exchange its original name for his. In 1913, Camel introduced the first blended cigarette in the United States.
Highly flavorful, the cigarette became an instant success. Later in 1916, American Tobacco followed with Lucky Strike, and the advertising battle began. For the next thirty years after that, tobacco companies lured customers with wildly false claims of health as well as social benefits from smoking. In the 1950s, three epidemiological studies demonstrated the exponential health risks associated with smoking, which ultimately led to the introduction of cigarette filters. In 1957, John Blatnick, a five term liberal representative from Minnesota, and a devoted smoker, led the subcommittee on government operations through hearings on the Federal Trade Commission’s oversight of cigarette advertising.
Blatnick become annoyed when the testimony revealed that the new filtered brands use stronger tobaccos, and so produce about as much tar and nicotine as the old unfiltered brands, a fact that had never before been noted in the industry’s advertising. In the aftermath of these hearings, Blatnick introduced a bill in the House to limit the amount of tar and nicotine that cigarettes produces and grant the FTC injunctive powers against deceptive tobacco advertising. So powerful was the tobacco industry, however, that the House not only denied the Blatnick bill a hearing, but stripped its sponsor of his subcommittee chairmanship and dissolved the subcommittee itself. In the year 1959, Surgeon General Leroy E. Burney wrote in the Journal of the American Medical Association, The weight of the evidence at present implicates smoking as the principal etiological factor in the increased incidence of lung cancer. Two weeks after the surgeon general’s statement appeared in the journal, the AMA shocked Burney by publishing an editorial that insists there are not yet enough facts to warrant the assumption of an all-or-none authoritative position on what a cause could be. Observers believed that the AMA downplayed the smoking issue because it needs allies to fight the implementation of Medicare.
On January 11, 1964, about two hundred members of the press were handed a one hundred and fifty word report by Surgeon General Luther Terry’s blue-ribbon advisory committee on smoking. The report concluded that many kinds of damage to body functions and organs, cells and tissues occur more frequently and severely in smokers than in nonsmokers. The New York Times called the findings a severe blow to the rear-guard action fought in recent years by the tobacco industry. It dismisses, one by one, the arguments raised to question the validity of earlier studies. Philip Morris’ research director, Helmut Wakeham, wrote that the industry must find a way to prove that its products are not harmful, and should do this with respect to the newest medical research.
At the annual shareholders’ meeting in April 1964, Philip Morris President Joseph Cullman said that his company scientists and outside experts felt the surgeon general’s prime conclusion linking lung cancer to smoking is unjustified, and not at all what Wakeham’s memo stated. Years later, Wakeham’s subpoenaed memo would provide compelling evidence in a critical liability lawsuit against the company. Also in 1964, the phrase Marlboro Country was lodged in the collective consciousness of the Leo Burnett ad agency team as it struggled to break Marlboro out of its deadbeat sales. One day, a member of the Burnett team brought in a recording of the score for the 1960 Western, The Magnificent Seven. Video footage was rolled as the narrator spoke over the rousing movie music.
The net effect was electrifying: A cigarette as a larger-than-life hero, its virtues made clear by thundering hoofbeats and soaring brass horns. Thirty years later, even though restricted by law to print media only, Marlboro Country has survived as one of the most successful advertising campaigns ever devised. In 1969, the Senate moved to ban cigarette advertising on TV and place health warnings in other ads. Philip Morris President Joseph Cullman saw the greatness in the bad news that the industry was facing. He saw that voluntarily agreeing to remove tobacco TV advertising would effectively end competition from new companies because, without TV, the introduction of new brands would prove prohibitively expensive.
In the bargain that Cullman made with Congress, specific references to cancer or other diseases were removed from warning label language, and industry lawyers quietly inserted a pre-emption section in the law, which essentially prevented states from awarding any damages in tobacco liability lawsuits. This section, along with package warning labels, became the companies’ main defense against liability lawsuits brought by smokers over the next twenty years. Over the next years, the proportion of cigarette ads in magazines had doubled because of the ban on broadcast advertising of cigarettes. In magazines that accepted cigarette advertising, people were unable to find a single article, in seven years of publication, which could have given readers any clear notion of the nature and extent of the medical and social havoc that the cigarette smoking habit was causing. The ’80s brought a new type of advertising called subliminal advertising. In 1980, Philip Morris purchased twenty-two exposures of the Marlboro logo for $42,000 in the movie Superman II, which was aimed largely at the youth market.
Philip Morris also found a loophole to the previous TV broadcasting ban. Their colorful ads at sporting events gave them access to millions of potential customers. In 1982, Congress doubled the excise tax on cigarettes to sixteen cents a pack. The tobacco companies entered a protest, claiming that the tax raise discriminated against smokers, who were poorer on average than nonsmokers. They then used this cover to boost the price of cigarettes at a rate never before contemplated.
Their profit margin soared to over twenty percent, twice the average return on equity in corporate America. In 1984, Henry Waxman engineered a bill that forced tobacco companies to list their ingredients and toughen the warning labels on cigarettes. This bill marked a turning point in the industry’s hold on the federal legislative machinery, but did nothing to restrict the manufacture or marketing of cigarettes. An estimated 3.9 billion dollars was spent in 1990 by the tobacco industry on conventional marketing, including advertising, promotions, and free-product distribution. Cartoon images of the Camel smooth character gazed from billboards and the Marlboro man rode the pages of youth-oriented magazines.
Tobacco sponsorships circumvented the television ad ban with clever billboard placement in major league sports arenas. The tobacco industry had virtually taken over some sports, such as women’s tennis, drag and stock car racing, and CART and Formula 1 racing, whose events promoted tobacco products on television during sports telecasts. (8, 4) The same trials and events that have occurred in the past hundred years continue to occur today in our country, and around the world. Because of all of these reasons, cigarette smoking has become completely co …