History of Tobacco Regulation - Tobacco: Economics and Politics

It is generally accepted that tobacco has been an extremely powerful force in American politics. Approximately 50 million smokers smoked 535 billion cigarettes in the past year. More than 100,000 employees receive $500 million in wages annually from tobacco manufacturing companies; over 4,500 wholesalers handle the distribution of tobacco products and hundreds of thousands of merchants depend on tire sale of cigarettes as a source of their income.

Cigarette companies had been spending over $200 million per year on radio and television advertising, and since the ban, almost all of this money has been diverted to other media advertising providing many thousands of jobs in ad agencies and in the various media. Three million people from about 750,000 families receive $1.4 billion annually for the cultivation of tobacco used in cigarettes.

Peripherally affected are those involved in producing the 40 million pounds of moisture-proof cellophane, the 70 million pounds of aluminum foil, the 27 billion printed packs, and the 2.7 billion cartons (Cigarette Advertising, 1970: 110-111; Wagner, 1971: 120; USDA, Tobacco Situation, 1971a: 29-31).

One writer, reporting on the present public policy trend, notes that "attempts to discourage smoking would affect the lives of millions of people and would have profound economic and political consequences" (Wagner, 1971: 121).

Advocates of cigarette smoking today are organized into extremely powerful groups, each having its own specific function and plentiful resources.

The Tobacco Tax Council, established in 1949, compiles data on the taxation of tobacco products by the Federal, state and local governments. The Council's annual booklet, "Cigaret Taxes in the United States" has been superseded by " The Tax Burden on Tobacco" since 1966. This pamphlet "undertakes to trace the history of tobacco taxes from the years of the Civil War down through [the present year]" (Tobacco Tax Council, 1970: iii).

The trade association promoting the welfare of the tobacco industry is the Tobacco Merchants Association of the U.S. It is composed of manufacturers, wholesalers, retailers, importers, exporters, leaf dealers, suppliers, and firms interested in the industry. Its Bulletins cover legislation, trends, special reports; its numerous other publications and activities seek to improve industry operations and expand outlets (e.g., international) f or potential sales (Tobacco Merchants Association, 1971: 1-4).

The tobacco industry's point of view is nurtured and protected by the Tobacco Institute, a nonprofit corporation founded in 1958. Its membership includes major U.S. manufacturers of cigarettes, smoking and chewing tobacco, and snuff: The Bloch Brothers Tobacco Company, Brown & Williamson Tobacco Corporation, Conwood Corporation, G. A. Georgopulo & Company, Helme Products, Larus & Brother Company, Liggett & Myers, Lorillard, Philip Morris Incorporated, R. J. Reynolds Industries, Scotten-Dillion Company, and United States Tobacco Company.

The Institute is financed by contributions from the large corporations according to their share of the market. The institute reports on the pro-tobacco side of the medical story, attempting to discredit antismoking publicity, and publishes information on the historical role of tobacco, its place in the national economy, the industry itself, and the public's use of tobacco products.

The Council for Tobacco Research, created in 1953 in response to medical bulletins reporting on the hazards of smoking, processes and administers millions of research grants. "Although research money was to be awarded with no strings attached [The Council] nicely serve[s] the purpose of identifying the industry with the welfare of humanity and spreading good will through the scientific community" (Wagner, 1971: 80).

The scientific data continue to be attacked from both sides. Since 1954 a great quantity of research has been published and, in turn, disputed. For example, "the press played up the Hammond and Auerbach study and the claim that twelve beagles had developed lung cancer" from cigarettes. "The findings have subsequently been downgraded by ' v the author to two microscopic tumors with the further revelation that two dogs in the control group also developed tumors" (Maxwell, 1971: 1).

Another area of contention has developed around the relationship between cigarette smoke itself and lung cancer. A recent paper by Dr. Geoffrey Myddelton given at the Second World Conference on Smoking and Health in London, September 20-24, 1971, compares the incidence of smoking and lung cancer in various countries. He indicates, "Japan smokes 86% as much as Britain but has only 27% of its lung cancer. Canada smokes twice as many cigarettes as the Netherlands but has only 69% as much lung cancer." He goes on to correlate the use of diesel file] in England to lung cancer (Maxwell, 1971: 2).

From the other side, the United States Public Health Service 1972 report The Health Consequences of Smoking maintains that "nonsmokers as well as smokers may be harmed by cigarettes, . . . tobacco smoke in closed cars and poorly ventilated rooms can contaminate the atmosphere for everyone. . . . The chief danger is exposure to low levels of the deadly gas, carbon monoxide. Experiments, with animals have shown that various concentrations of the colorless, odorless, and tasteless gas 'adversely affect' the structure and function of the heart and lungs. The implication is that this may also be true in man" (Study Says Cigarette Smoke Also May Harm Nonusers, 1972: 1).

It is estimated that at the present time one and a half to two million adults give up smoking every year. Sensing the hazards of the future, some cigarette, companies sought fiscal security in diversification and substitution; tobacco manufacturers are now marketing, for example, safety razors, fertilizers, dog food, ballpoint pens, peanut butter and other non-nicotine products. By 1967, sales on non-tobacco products accounted for approximately one-third of the, total sales of cigarette manufacturers.

It remains to be seen whether tobacco power will be whittled away any further in the next few years. Some feel that "the tobacco subsystem has succeeded in keeping the health question a low priority item on the government's agenda by playing one government agency off against another.... This subsystem cuts across institutional lines and includes the paid representatives of tobacco growers, marketing organizations and manufacturers.,. Congressmen representing tobacco growing states [are] leading members of four subcommittees, including two ,appropriations subcommittees and two committees in each house of Congress handling tobacco legislation. . . . Tobacco power [is] thus firmly entrenched and well supported" (Wagner, 1971: 121).

On the other hand, a strongly worded commentary by an industry spokesman cites Justice John Marshall's statement to illustrate industry's precarious position: "The power to tax involves the power to destroy." He continues with a description of the tobacco industry's present situation:

The onslaught of state and local taxes on tobacco products ... represents a most serious threat to all segments of our industry.... We are now facing a calculated attempt to destroy, or at least drastically curtail, the sale of smoking products. The political and economic climate is most favorable for this attack. Smoking and health is a prime political issue in the same context as air pollution, crime in the streets, and consumerism. At the same time, local governments are verging on bankruptcy. Revenue of any sort is therefore a must. It is a tough battle, and cigarette industry is currently bearing the largest part of the attack (Regensburg, 1971: 146).

The revenues gained from tobacco tax collections are significant. Over $2.1 billion in Federal taxes and over $2.5 billion in state cigarette taxes were collected in Fiscal Year 1971 (Tobacco Tax Council, 1970: 4-6, 8; USDA, Tobacco Situation, 1971b: 44). Total tobacco taxes were $4.8 billion in 1971 compared with $1.7 billion in 1950.

In 1970 tobacco taxes accounted for 1.1% of total federal tax receipts and represented 13.8 percent of all excise taxes (USDA, Tobacco Situation, 1971b: 40). This places the tobacco tax as the seventh largest source of collection by the Federal government behind the major giants, e.g., income and profit taxes (both corporate and individual), employment taxes, manufacturers excise taxes, alcohol taxes, and estate and gift taxes. In terms of individual commodities it ranks behind only alcohol. Thus, federal revenue would be importantly affected if tobacco consumption were to decline.