The American Tobacco Company had its origins in the 1890s; its fortunes greatly increased under the chairmanship of James "Buck" Duke. A ruthless businessman, Duke was able to acquire exclusive rights to the Bonsack, a cigarette-making machine that, with an output of 200 cigarettes a minute, was the fastest in the world; up until that time, cigarettes had to be hand-rolled. With this revolutionary machine under his control, Duke was able to undercut and take over virtually all of his competition, to the point that, by the time the American Tobacco Company was founded in 1890, it had a virtual monopoly of the American cigarette market. The company was one of the original twelve members of the Dow Jones Industrial Average in 1896.
Not content with merely controlling the American market, Duke, in 1901, turned his attention to Europe. Landing in England, he immediately bought Odgen's of Liverpool, and began using the same methods to bring the English cigarette trade under his control. However, twelve large cigarette firms grouped their resources together, forming the Imperial Tobacco Company of Great Britain and Ireland. Not only was Imperial Tobacco able to hold off the American Tobacco Company, they took the battle to Duke's front door by buying the Brown and Williamson Tobacco Company and launching their own brands on the American market.
Realizing that he perhaps had bit off more than he could chew, Duke negotiated a settlement with Imperial Tobacco, leading to a truce in 1902. The terms of their arrangement were that:
- Imperial would have nothing to do with the American market, except for tobacco-leaf buying;
- American Tobacco would retreat from the British market and sell Ogden's to Imperial;
- Imperial would acquire the rights to American Tobacco brands in Britain, and vice-versa; and
- A joint company, the British American Tobacco Company, would be organized to handle exports of both companies outside of the United States and Great Britain. This company would be established in London, England, but the majority of shares would be held by Americans, along with J. B. Duke becoming its first chairman.
Akin to the domination of Standard Oil in the same era, the American Tobacco Company dominated the industry by acquiring over 200 other rival firms. The United States Government began to take action against American Tobacco in 1907, and in 1911, the U. S. Supreme Court ruled against them, stating that, under the Anti-Trust Act, the American Tobacco Company was a monopoly, and therefore illegal.
The ruling broke the American Tobacco Company into four major, independent units:
The company's share in British American Tobacco was sold at the same time.
The company built processing plants and warehouses in Reidsville and Durham in North Carolina. In 1994 BAT, through their American Brown and Williamson Tobacco Company subsidiary, acquired its former parent, American Tobacco Company (though reorganized after anti-trust proceedings). This brought the Lucky Strike and Pall Mall brands into BAT's portfolio.
American Tobacco left Reidsville and Durham in the later 1980's. A section of the East Coast Greenway, known as the American Tobacco Trail, runs along a railroad bed abandoned by the Durham plant of the American Tobacco Company in the 1980s. The railroad which runs behind the former Reidsville plant, which has been in place since the American Civil War days, is one of the main lines for the Norfolk/Southern Railroad.
- Air Flow
- American (continued by Brown and Williamson)
- American Brand
- American Eagle
- Blue Boar
- One-Eleven (a.k.a. "111")