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American Tobacco Company

The American Tobacco Company was a U.S.United StatesThe United States is a federal country in North America made up of 50 states, the District of Columbia as the seat of government, and territories such as Puerto Rico and Guam; its capital is Washington, D.C. The Continental Congress adopted the Declaration of Independence on July 4, 1776. The 2020 census (April 1, 2020) counted a resident population of 331,449,281, and the 435 seats of the House of Representatives are apportioned among the states on the basis of the census.Open the full entry tobacco enterprise organized by James B. Duke in 1890. Known as the “tobacco trust,” it was once the world’s largest cigarette maker and one of the first giant holding companies in American industry; in 1911 the Supreme Court of the United StatesSupreme Court of the United StatesThe Supreme Court of the United States is the highest court of the U.S. federal judiciary. Established under the Constitution and the Judiciary Act of 1789, it has consisted since 1869 of a Chief Justice and eight Associate Justices and sits in Washington, D.C.Open the full entry held that it violated the Sherman Antitrust Act and ordered it dissolved, splitting its business among several companies.

Contents12 sections
Key facts

W. Duke, Sons & Co. and the Bonsack Machine

In 1884 the company leased and installed two cigarette-making machines invented by James Bonsack in Durham; when working properly, one machine could do the work of 48 hand rollers, and the company cut its cigarette production costs in half. In the spring of that year James B. Duke went to New York City to open a branch office.⁠[1]

Formation of the American Tobacco Company

The American Tobacco Company, organized by James B. Duke, was incorporated on January 31, 1890, with Duke as president. It combined the country’s five leading cigarette manufacturers, centered in Richmond, VirginiaVirginiaVirginia, officially the Commonwealth of Virginia, is a U.S. state whose capital is Richmond. It entered the Union on June 25, 1788, as the 10th state, and had a population of 8,631,393 in the 2020 census (April 1, 2020).Open the full entry, and New York City.⁠[3][2][1]

Control of the U.S. Tobacco Industry

Federal Court Finds Antitrust Violation

In 1907 a federal court ruled that the American Tobacco Company held a monopoly on licorice, a flavoring, and was in violation of the Sherman Antitrust Act; the ruling was appealed to the Supreme Court of the United States.⁠[3]

Supreme Court Orders Dissolution

On May 29, 1911, the Supreme Court of the United States decided United States v. American Tobacco Co. (221 U.S. 106), holding that the company had to be dissolved. On November 16, 1911, it issued a decree dividing the company into three major parts, American Tobacco, Liggett and Myers and P. Lorillard, and control of the R. J. Reynolds Tobacco Company was relinquished.⁠[4][3]

The Duke Homestead State Historic Site lists a new American Tobacco Company, Liggett and Myers, P. Lorillard and R. J. Reynolds as the four major successor companies. After the dissolution James B. Duke continued his tobacco business abroad and invested in hydroelectric power.⁠[1]

Lucky Strike and Pall Mall

In 1916 American Tobacco introduced Lucky Strike, its most popular brand, whose blend was perfected by Charles A. Penn, and in 1939 it introduced Pall Mall, one of the first king-size cigarettes. With these brands it was the most successful cigarette manufacturer of the 1940s.⁠[2][3]

Decline and Reorganization as American Brands

Plant Closings in Louisville, Richmond and Durham

The company closed its Louisville plants in 1971, its Richmond plants in 1981 and its Durham plants in 1987, while expanding its Reidsville plant. In 1986 the American Tobacco Company became a subsidiary of American Brands.⁠[3]

Sale to B.A.T Industries

Under an agreement dated April 26, 1994, B.A.T Industries p.l.c. agreed to buy substantially all of the outstanding stock of The American Tobacco Company, a wholly owned subsidiary of American Brands. The Federal Trade Commission, noting that B.A.T’s Brown & Williamson Tobacco Corporation and American Tobacco were the third- and fifth-largest U.S. cigarette manufacturers, had reason to believe the deal would lessen competition; a proposed consent agreement published in January 1995 required the companies to divest six former American Tobacco discount brands, Montclair, Riviera, Malibu, Bull Durham, Crowns and Special Tens, within 12 months, potentially together with the Reidsville, North Carolina, plant and the Tareyton, Silva Thins and Tall brands.⁠[5]

Late 20th Century: American Brands Leaves Tobacco

American Brands diversified further and by the end of the 20th century was known as Fortune Brands, having formally left the tobacco industry.⁠[2]

Related Organizations, Websites, and Public Accounts

Duke Homestead State Historic Site: Official website: https://historicsites.nc.gov/all-sites/duke-homestead (opens in a new window).⁠[1]

Sources

  1. Cultivation of a Tobacco Empire (opens in a new window)
  2. American Tobacco Company (opens in a new window)
  3. American Tobacco Company (opens in a new window)
  4. United States v. American Tobacco Co., 221 U.S. 106 (1911) (opens in a new window)
  5. B.A.T Industries p.l.c., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment (opens in a new window)