King James I of England found smoking tobacco repugnant. It was "a custom loathsome to the eye, hateful to the nose, harmful to the brain, dangerous to the lungs". But when it came to the tax revenues it raised, well, that was different.
In 1607, John Rolfe and his band of colonists had been dispatched to the Americas to find and send back gold. They didn't find it. But they did discover that tobacco plants flourished in the surroundings of the colony they established in Virginia, and it turned out to be the next best thing. Smoking became all the rage back home. The king granted English merchants a monopoly on the supply, which was subject to duty upon being unloaded in London. To keep prices (and the tax-take) high, growing tobacco in your back garden was banned (although many did it anyway).
In Virginia, tobacco became so valuable that it replaced coins (which were in short supply) as the main medium of exchange. Everything from debts, wages and taxes were paid for in tobacco, while warehouses stuffed with the leaves became de facto reserve banks. Even the governor's salary was calculated on the price of tobacco.
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The colonists became fixated with growing the crop so much so that farmers had to be forced to grow food. Immigration rose and slaves were brought in from Africa, swelling the exportation of tobacco to Europe from ten tons in 1619 to 750 tons by 1639. In that time, the price plummeted from 27 pence per pound to just three.
The colonial authorities panicked. Yield restrictions were imposed, and the leaves were subject to quality controls. Yet, the price of tobacco plunged so far that it became no longer economical to grow it. In January 1639, half of the tobacco crop was ordered to be destroyed. But it was to no avail. To the north, Maryland had since sprung up as a competitor, and with its more diversified economy, it was better able to weather the storm. Virginia was condemned to suffer years of economic depression.
Chris Carter spent three glorious years reading English literature on the beautiful Welsh coast at Aberystwyth University. Graduating in 2005, he left for the University of York to specialise in Renaissance literature for his MA, before returning to his native Twickenham, in southwest London. He joined a Richmond-based recruitment company, where he worked with several clients, including the Queen’s bank, Coutts, as well as the super luxury, Dorchester-owned Coworth Park country house hotel, near Ascot in Berkshire.
Then, in 2011, Chris joined MoneyWeek. Initially working as part of the website production team, Chris soon rose to the lofty heights of wealth editor, overseeing MoneyWeek’s Spending It lifestyle section. Chris travels the globe in pursuit of his work, soaking up the local culture and sampling the very finest in cuisine, hotels and resorts for the magazine’s discerning readership. He also enjoys writing his fortnightly page on collectables, delving into the fascinating world of auctions and art, classic cars, coins, watches, wine and whisky investing.
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