CHAPTER VII

THE MARKETING AND SALE OF TOBACCO LEAF

METHODS OF DISPOSAL BY THE GROWER. THE WAREHOUSE SYSTEM. DIRECT PURCHASE. PRINCIPAL MARKETS IN THE UNITED STATES. PRICES.

THE MARKETING AND SALE OF TOBACCO LEAF

When the tobacco leaf is fully cured it is at once prepared for the market. The first step is the planters' classification of the leaf. In the case of pipe smoking and chewing tobacco the planter collects all the imperfect, injured leaves, or those inferior from any cause, and ties them in bundles. These are the planters _lugs_. All other grades are _leaf_. Slightly injured leaves are classed as _low-leaf_ or _seconds_. The others are classed _medium_, _good_, _fine_ and _selected_ leaf, according to grade, color, quality, etc.

In the case of cigar leaf tobacco a similar classification is made, more care being taken owing to the very great difference in price between the better and poorer qualities. This difference may be as much as 20c in the lb., the finer and more suitable leaf being eagerly sought for.

Pipe smoking and chewing tobacco leaf is usually packed in hogsheads or cases each weighing from 1,000 to 1,400 lbs. The operation of packing the leaf is called "prizing." Cigar leaf is usually put up in "hands." A "hand" consists of from 25 to 75 leaves tied together. Four hands tied together make a "carrot" and 80 carrots go to the bale, but the size of the bale varies considerably. The tobacco is then ready for the buyer.

There are two systems of disposing of the planters' product: (1) direct purchase by the manufacturer or by a middleman from the grower; and (2) what is known as the warehouse system. In the southern states the warehouse system prevails. Every important tobacco section in the south has its public warehouse which is under the control and supervision of state law. Many of these warehouses are long established, that at Richmond, Va., dating as far back as 1730, and those at Louisville and Clarksville about 1839.

On appointed days the planter brings his leaf to the warehouse. Here it is entered as "loose leaf" or "inspected leaf." In the case of loose leaf, the tobacco is open to the inspection of prospective buyers, who examine it and afterwards bid on it. In the case of "inspected leaf" the warehouse officials first examine the consignments, grade them and mark them according to their judgment, taking samples. The samples are open to buyers' inspection and form the basis of sale. Tobacco auctions are regularly held when the buyers assemble and bid on the "loose leaf" and "inspected" lots. Prices of the various grades are fixed and sales take place at the day's price.

The principal tobacco markets are:

For Kentucky and Tennessee--At Louisville, Clarksville and Cincinnati.

For Maryland and Ohio--At Baltimore.

For North Carolina--At Durham and Winston.

For Virginia--At Richmond.

The warehouse system has the great advantage that the proceedings are open and the prices are recorded and published. Hence growers can know how the market fluctuates and judge the best time for sale. This is not the case when the sale is private between the buyer and seller as is customary in the eastern and northern states. Here the price actually received by the grower is often different from that given out as paid.

The price of tobacco leaf has had many vicissitudes during the past 25 years, the price often having reached so low a point as to discourage producers. Thus at Winston, N. C., the price has gradually fallen from 12.3c per lb. in 1889 to 6.3c in 1896. In the same period Burley leaf at Louisville and Cincinnati fell from 10c to 7-1/2c. Prices similarly dropped in other centers. The price of cigar leaf has latterly increased. In 1900 prices ran from 6 to 15 cents; in 1905 from 8 to 17 cents. Many conditions at home and abroad affect the price, such as bad harvests or inferior grades of produce.

The tobacco trust has been very unjustly blamed by many for the falling price of tobacco. As a matter of fact and record, however, the concentration of buying power by eliminating the middleman and the small dealers has not only placed the grower in a better position by giving him a better price, as recent records show, but it has benefited the consumer also who can obtain the superior grades at a lower price. It is the middleman's profit that has been cut. Moreover, the concentrated buying power of the large interests here has been an effective force in keeping up tobacco leaf prices against the foreign buyers. It must be remembered that about half of our crop is exported. The buyers of this portion, who are principally the agents of foreign governments (in the cases where tobacco is a government monopoly as in France, Italy, etc.) assemble at the auctions and bid in the usual way. As this competition is very limited there is always an opportunity for such buyers to agree among themselves as to the limit of prices. This has been one of the important factors which has kept the prices of tobacco leaf down. The concentration of American buying power has, however, been a formidable check on it, the prices received by the growers being now fair and reasonable, and such as are the result of a healthy market, where the factors of supply and demand have their full share of effect.

The government statistics show that for 1914 the prices of leaf varied from 5.5c to 20c for common to good varieties.

(_For references see end of Chapter VIII_)