When tobacco was first planted in Jamestown, Spanish tobacco was
selling for eighteen shillings per pound. Virginia tobacco was inferior
in quality, but it was assessed in England at ten shillings per pound.
On the basis of these high prices the Virginia Company of London agreed
to allow the Virginia planters three shillings per pound, in trade at
the magazine in Jamestown, for the best grades.
Even though it seemed that the London Company was getting the lions
share, these prices proved to be very profitable for the colonists and
the infant tobacco industry increased very rapidly. During the period
1615-1622 tobacco exports increased from 2,300 to 60,000 pounds, and by
1630 the volume had risen to 1,500,000. Meanwhile prices had fallen as
rapidly as production and exports had increased. In 1625 tobacco was
selling for about two shillings per pound, but in 1630 merchants were
reported to be buying it for less than one penny per pound.
It was quite obvious that the fall in prices was due to overproduction.
The English first attempted to alleviate the condition in 1619 through
monopolistic control. Negotiations were conducted with the Virginia
Company of London, Henry Somerscales, and Ditchfield in 1625. All were
opposed by the colony, except that of the London Company, because the
colonists thought that the various proposals would benefit the King and
a small group of court favorites at the expense of the planters.
The next move was made by the colony. In an attempt to restrict the
production of tobacco, Governor Wyatt ordered that production be
limited to 1,000 plants per person in each family in 1621. These same
instructions provided that only nine leaves were to be harvested from
each plant. Similar laws were enacted in 1622 and again in 1629, but
these laws were probably not strictly enforced as prices failed to
improve. Undaunted by failure in its first attempt to cope with the
situation, the General Assembly made several attempts at price fixing.
In 1632 tobacco prices in the colony were fixed at six pence per pound
in exchange for English goods; in 1633 it was increased to nine pence.
The 1639 crop was so large that the legislature ordered all of the bad
and half of the good tobacco destroyed; merchants were required to
accept fifty pounds of tobacco per 100 of indebtedness. English goods
were to be exchanged for tobacco at a minimum rate of three pence per
pound. The minimum rate of the 1640 crop was fixed at twelve pence.
Such legislation failed to meet with the approval of the home
government and in 1641 tobacco averaged about two pence per pound.
Following the depression of 1639 tobacco prices failed to rise above
three pence, and probably never averaged more than two pence per pound
for the next sixty years. To prevent the complete ruination of the
tobacco planters, the General Assembly established fixed rates for
tobacco in the payment of certain fees. In 1645 these fees were payable
in tobacco rated at one and one-half pence per pound; ten years later
the rate had increased only a half pence. The war with Holland,
restrictions on the Dutch trade, and the plague in England brought
forth another serious depression in the colonies in the 1660's. In 1665
the tobacco fleet did not go to the colonies on account of the plague
in London. Tobacco prices dropped to one pence per pound.
[Illustration: METHODS OF TRANSPORTING TOBACCO TO MARKET
a, Upon canoes. b, By upland boats. c, By wagons. d,
Rolling the hogshead.]
[Illustration: PLANTATION TOBACCO HOUSES AND PUBLIC WAREHOUSES
a, The common tobacco house. b, Tobacco hanging on a
scaffold. c, The operation of prizing. d, Inside of a
tobacco house, showing the tobacco hanging to cure. e,
An outside view of a public warehouse. f, showing the
process of inspection.]
This new depression stirred the Virginia legislature. In 1662 the
Assembly prohibited the planting of tobacco after the last of June,
provided that Maryland would do the same. Maryland rejected the idea.
This would have eliminated a great deal of inferior tobacco, for much
of the tobacco planted in July seldom fully matures before it must be
harvested to save it from the frost. The planters in both colonies
continued to produce excessive crops and the depression became more
acute. Led by Virginia, the North Carolina and Maryland legislatures
prohibited the cultivation of tobacco in 1666. Lord Baltimore again
refused to permit a cessation in Maryland, consequently Virginia and
North Carolina repealed their legislation. Instead of cessation the
Virginia crop was so large in 1666 that 100 vessels were not enough to
export the crop. The possibility of another enormous crop in 1667 was
eliminated by a severe storm that destroyed two-thirds of the crop.
However, the glutted market resulting from the large crop grown in 1666
caused prices to fall to a half pence per pound.
In the 1670's prices climbed to one and one-half pence, but a
tremendous crop in 1680 glutted the market again. The crop was said to
have been so large that it would have supplied the demand for the next
two years, even if none were produced in 1681. The General Assembly
once again came to the aid of the planter by rating tobacco in payment
of debts at one and one-fifth pence in 1682, and two pence in payment
of quit-rents in 1683. Once again Virginia renewed attempts to bring
about a cessation of production, but the English government refused to
permit such action claiming that it would stimulate foreign production
and thereby reduce the revenue to the Crown. In April, 1682 the General
Assembly convened but was prorogued by Lieutenant Governor Sir Henry
Chicheley a week later, when it was apparent that the members were
determined to discuss nothing but the cessation of tobacco. A week
later a series of plant cuttings broke out in Gloucester County
followed by others in New Kent and Middlesex counties. Approximately
10,000 hogsheads of tobacco were destroyed before these riots were put
down by the militia. Probably as a result of this destructive act,
prices rose to two and a half pence in 1685, but a bumper crop of over
18,000,000 pounds in 1688, the largest ever produced to that date,
caused prices to drop to one penny per pound in 1690.
Throughout most of the seventeenth century the tobacco planters were
plagued with the problem of overproduction and low prices. To add to
their woes the entire eighteenth century was one of periodic wars
either in Europe or in America, or both. King William's War ended in
1697 and the following year tobacco prices soared to twenty shillings
per hundred pounds and prices remained good for the next few years. The
outbreak of Queen Anne's War and another 18,000,000 pound crop ushered
in another depression. Several thousand hogsheads of tobacco shipped on
consignment in 1704 brought no return at all, and the next year many of
the planters sold their tobacco for one-fourth of a penny per pound.
Instead of attempting to limit production in an effort to relieve the
market conditions, these low prices caused the planters to increase
production as they attempted to meet their obligations. In 1709 tobacco
production reached an all-time high of 29,000,000 pounds.
The Peace of Utrecht in 1713 seems to have brought little relief.
Tobacco prices failed to improve until after the passage of the
inspection act in 1730. In 1731 tobacco sold for as much as twelve
shillings six pence per hundred pounds, despite the fact that Virginia
exported 34,000,000 pounds. In a further attempt to improve the quality
and the price of tobacco the General Assembly ordered the constables in
each district to enforce the law forbidding the planters to harvest
suckers. Anyone found tending suckers after the last of July was to be
heavily penalized. These two measures seem to have produced the desired
effects; in 1736 tobacco sold for fifteen shillings per hundred pounds.
Unlike Queen Anne's War, King George's War seemed to stimulate tobacco
prices and they remained relatively good for a number of years after
the Peace of Aix-la-Chapelle in 1748. During the early 1750's merchants
paid up to twenty shillings per hundred pounds, even though Virginia
had been exporting from 38,000,000 to 53,000,000 pounds annually.
During the French and Indian War the belligerents agreed to continue
the tobacco trade, but in spite of this arrangement there were unusual
price fluctuations owing primarily to inflation and occasional poor
crops. In 1755 a period of inflation was created when Virginia resorted
to the printing press for currency. At the same time war operations
hampered production and only about one-half of the usual annual crop
was produced, and tobacco prices rose to twenty shillings per hundred
weight. During the years of peace just prior to the American
Revolution, tobacco averaged about three pence per pound and never fell
below two pence. With the outbreak of hostilities the General Assembly
prohibited the exportation of tobacco to the British Empire.
Frequent overproduction and the numerous wars during the eighteenth
century seem to have caused more violent price fluctuations than those
of the previous century. Although the American colonies did not
participate in all of the wars involving England, all of them had their
effects upon the colonies. Virginia depended primarily upon England to
transport her tobacco crop and during the war years there was a
frequent shortage of ships used for the tobacco trade. As this cut off
the tobacco supply to the foreign markets, many of them began to grow
their supply of tobacco.
The tobacco crops were small almost every year during the Revolution.
Owing to the increase in the demand for foodstuffs many of the planters
switched from tobacco to wheat. During the first year of the war
tobacco exports dropped from 55,000,000 to 14,500,000 pounds. It has
been said that for the entire period 1776-1782 Virginia's exports were
less than her exports of a single year before the Revolution. Wartime
prices and inflation caused tobacco prices to increase from eighteen
shillings per hundred pounds in 1775 to 2,000 shillings, in Continental
currency, in 1781. An official account in the latter part of 1780
related that twenty-five shillings per hundred pounds in specie was
considered a very substantial price. A very small crop in 1782 was
followed by one that topped any of the pre-war crops, and by 1787
prices had fallen to fifteen pence per pound. Prices dropped to $12.00
in 1791, and a period of relatively low prices continued until 1797
when prices increased as a result of an extensive shift from tobacco to
wheat. In 1800 prices dropped to $7.40 per hundred pounds as Virginia
exported a near record crop of over 78,000 hogsheads of tobacco.