13. The advent of commercially manufactured cigarettes changed the tobacco industry
In 1876 a Richmond, Virginia tobacco processing firm then known as John F. Allen and Company offered a $75,000 prize for a cigarette rolling machine (equivalent to $ 1.75 million today). Several inventors attempted to win the sizable amount of cash. A Virginia inventor, James Albert Bonsack, filed a patent application for such a machine in 1880. He offered the machine to the Allen company, then renamed Allen and Ginter. They decided the machine was insufficiently reliable and rejected it, preferring to keep the reward money and designing a similar machine for their use, which did not infringe on Bonsack’s patent. Bonsack turned to another cigarette manufacturer, James Buchanan Duke, head of W. Duke and Sons in Richmond. By the end of the decade, Duke controlled 40% of the American cigarette market. That year Duke took over the four major competitors to his company, including Allen and Ginter.
Duke’s new conglomerate was named the American Tobacco Company. His near-monopoly controlled 90% of American cigarette production at the turn of the 20th century. He turned his attention to controlling the lucrative market for cigarettes in Britain and Ireland, and to prevent his doing so several British manufacturers merged to form the Imperial Tobacco Company. Imperial Tobacco attempted to break into the American market, and competition between the two tobacco giants led to an agreement. Under the agreement, American Tobacco controlled the market in the Americas, Imperial in Britain, and the companies formed a joint venture, British American Tobacco, to market primarily cigarettes in the rest of the world, including the British Empire. In 1906, American Tobacco, found to be in violation of the Sherman Antitrust Act, was broken up into four companies, Ligget and Myer’s (L & M), Lorillard, R. J. Reynolds, and American Tobacco.