6 January 1639: Virginia orders the destruction of its tobacco crop

Faced with the plunging price of tobacco, the colonists of Virginia directed that half of the crop should be destroyed to avoid an economic catastrophe, on this day in 1639.

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.

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.

Most Popular

Should you take a 25% tax-free pension lump sum in instalments?
Pensions

Should you take a 25% tax-free pension lump sum in instalments?

Taking out a 25% tax-free lump sum sounds appealing but it might not be the best way to manage your pension
30 Sep 2022
Markets may have bounced, but this is not the end of the bear market
Stockmarkets

Markets may have bounced, but this is not the end of the bear market

Stocks are back on the rise, commodities and precious metals prices are up – even the pound has rebounded. But none of this is typical of bull markets…
5 Oct 2022
October’s Premium Bonds: how to check if you are a winner
Savings

October’s Premium Bonds: how to check if you are a winner

NS&I has added almost 110,000 more prizes to October’s Premium Bond draw – are you a winner?
4 Oct 2022