American Tobacco Company
Company History
Shortly after the Civil War Washington Duke of North Carolina started his
tobacco business. W. Duke & Sons was formed with his sons Benjamin Duke,
Buck Duke, Brodie Duke, and James Buchanan Duke. Top cigarette
manufacturers during this time were W. Duke & Sons, Allen & Ginter of
Richmond, Virginia, Kimball of Rochester, New York, Kinney of New York City,
and Goodwin of New York City. Kinney owned the Sweet Caporal brand;
Goodwin owned the Old Judge brand. The industry was revolutionized in 1881
with the invention of the cigarette rolling machine by James Bonsack. While the
other companies are hesitant to switch to machine made cigarettes, Buck Duke
makes the change. Buck Duke became the front-runner by inventing the slide-
and-shell cigarette box and introducing promotional ideas such as premium
coupons and picture inserts of actresses and sports figures. Profits continued to
rise.
In 1890 W. Duke and Sons absorbed all their rivals to form the American
Tobacco company. By 1904 a corporate reorganization formed the new American
Tobacco Company. Nickel denominations were the rule, and the law allowed
packages of 10, 20, 50, and 100 cigarettes. The cheaper brands of the day were
American Beauty, Coupon, and Home Run cigarettes selling at 20 for 5 cents.
Standard brands of the day were Piedmont and Sweet Caporal cigarettes, which
sold at 10 for 5 cents. The cigarette group had major factories in New York City at
the Kinney-Duke branch and also in Richmond, Virginia. Each location produced
about half of the cigarettes for the company. The major scrap factory was the
Luhrman and Wilbern Company at Middletown, Ohio. (Polar Bear scrap
tobacco). <incorporate image of Polar Bear factory>
From 1904 to 1910 Duke’s companies produced 88% of the nations cigarettes,
75% of smoking tobacco, and 90% of snuff. In 1907 the monopoly went too far as
American Tobacco purchased Butler-Butler company (Sovereign and Pall Mall
cigarettes). Two months later, in July 1907, the U.S. government brought suit
against the American Tobacco Company for restraint of trade. The suit was
instigated by Teddy Roosevelt. On May 16, 1911 the Supreme Court ruled that the
American Tobacco Company was in “restraint of trade and an attempt to
monopolize and a monopolization”. The company was given 6 months to
dissolve.
On November 16, 1911 American Tobacco Company was split up, with new
companies Liggett & Myers being given 28% of the cigarette business (including
the brands Piedmont, American Beauty, Fatima, Coupon, and Home Run) and P.
Lorillard is given 15% of the cigarette business (including the brands Helmar,
Egyptian Deities, Turkish Trophies, and Murad). American Tobacco Company
retained 37% of the cigarette business and keeps Sweet Caporal, Sovereign, Pall
Mall, Hassan, and Mecca brands.