The opposition of King James to tobacco led to the imposition of taxes on its import into England: that from Spain and Portugal was 2d a pound; that from Virginia 6s. 10d. In spite of all this array of evidence as to the detrimental effects of tobacco on the human body its consumption has steadily increased and spread over the entire world. Colossal fortunes have been made in its processing and trade. No product of the soil with the exception of grains used in the manufacture of alcoholic beverages has ever returned such bounteous revenues to the United States government. In the fiscal year ending June 30, 1954 there was paid into the treasury of the United States, the gigantic sum of $1,580,299,000 from taxes on various tobacco products. Of this vast total, Virginia tobacco manufacturers that year contributed 356,867,000 dollars. Municipal and other local taxes are not included in these figures.
Tobacco culture in America was a highly profitable enterprise for England. The colonists produced and sold the raw product. Very little tobacco is used in the raw state. Before tobacco is ready for the market it must be processed into the various forms demanded by the trade. It was estimated that one man engaged in tobacco growing in Virginia kept three Englishmen employed, that is, sailors engaged in transportation, processors and tradesmen. The English government also derived considerable revenue on the surplus tobacco products resold on the European market.
Tobacco Became Money
One of the needs of the colony was a medium of exchange: something that could be used for money. As the balance of trade was heavily in favor of the Mother Country, there was no opportunity for an accumulation of English money in America. So tobacco became acceptable for goods, services, and the payment of debts. Salaries were fixed in pounds of tobacco.
Fluctuating Prices
The value placed on tobacco in England varied with the supply and demand. With the introduction of Negroes in 1619, and the greatly increased immigration from England, the acreage devoted to the culture of tobacco expanded rapidly. The first serious effects of over-production occurred in 1630, when the price fell from three shillings, six pence to one penny a pound. This calamity proved to be a blessing in disguise. The next year, a boat of "18 tons burden," loaded with corn and tobacco disposed of its cargo at Salem, Massachusetts, then but recently settled. The corn brought six shillings a bushel. This started a brisk trade and a Dutch ship, in 1632, took 2,000 bushels of corn from Virginia to New England. In 1633, it was estimated that 10,000 bushels of corn from Virginia were sold in Massachusetts besides a number of beef cattle, goats, and hogs. In spite of the ruinously low prices which sometimes prevailed, the amount of tobacco shipped overseas continued to increase. In 1639, 1,500,000 pounds were exported from Virginia alone.
Growth of the Colony
Captain John Smith summarized the condition of the colony in 1629 in these words:
Master Hutchins saith, they have 2,000 cattle, and about 5,000 people; but Master Floud, John Davis, William Emerson, and divers others, say about five thousand people, and five thousand kine, calves, oxen, and bulls; for goats, hogs, and poultry; corne, fish, deere, and many sorts of other wild beasts; and fowle in their season, they have so much more than they spend, they are able to feed three or foure hundred men more than they have.