Snuffed out

By Ken Otterbourg

They released the report on a Saturday, when the financial markets would be closed. This was by design. At 9:30 a.m., the reporters — about 200 in all — filed into the auditorium at the State Department. They were given the 387-page document. The enormous room and a few hallways had been sealed off from the rest of the building. Guards were posted at the exits, and once inside, no one was allowed to leave. The press conference was to start at 11, giving the journalists and others in attendance all of 90 minutes to read the Report. Just for that day — because of that day — smoking was banned in the auditorium, so many of those on hand lounged in the adjacent corridors, where it was OK to have a cigarette.

At 11 that morning, Jan. 11, 1964, Surgeon General Luther Terry took to the podium. He made a few statements about his advisory committee’s professionalism and hard work during the 18 months it took to produce the Report. Then he got down to business. “Out of its long and exhaustive deliberation the committee has reached the overall judgment that smoking is a health hazard of sufficient importance to the United States to warrant remedial action.”An hour later, the news conference ended, and the reporters streamed out of the building to file their stories. The lead headlines in the Sunday newspapers said it all: “Cancer Link Held Certain” and “U.S. Report Calls Cigarettes Peril.” But across North Carolina, in the heart of tobacco country, there was a parallel story line, a spin espoused by the politicians and the farmers and the cigarette industry. It asserted Terry and his scientists and all their statistics were mistaken in their conclusions. The Winston-Salem Journal ran a sidebar on its front page with the headline “Short-Lived Impact is Predicted.” The paper quoted one tobacco man’s opinion of the report: “I give it less than 30 days to be forgotten.” U.S. Sen. Sam Ervin said of the findings, “These are about on a plane with the conclusion of the past that malaria was caused by the night air.”

They were wrong. In many ways, the Report, issued 50 years ago, changed North Carolina’s economy. Not by itself, of course, but the federal government’s decision to declare war on smoking, on tobacco and, by extension, on our defining industry and most profitable crop, was the singular shove that pushed the state toward where it is today.

Nowadays, the joke is that the only place you hear about Tobacco Road is on ESPN during college basketball season, but in 1964 North Carolina was shaded and sheltered by the golden leaf. Tobacco dominated Tar Heel agriculture, accounting for half of the $1.1 billion in total farm receipts. Equally important, it could be profitably grown on small plots, on average only a few acres, so tens of thousands of families raised crops that were flue-cured, then taken down to the warehouses to be sold. The cash it put in those farmers’ pockets drove local economies.

Sen. Dan Blue, a Wake County Democrat and a former speaker of the N.C. House, grew up on a tobacco farm in Robeson County — “a two- to three-horse farm,” as he calls it. He was in high school, active in Future Farmers of America, when the report came out. “I got the sense that it was going to somehow change things,” Blue — a 64-year-old lawyer — says. At the time, he recalls, “There was no crop that could substitute for tobacco, and we promised fidelity to it.”

That rural fabric in places such as Robeson County and across the Coastal Plain and even into the small towns of the Piedmont was stitched to manufacturing in the urban factories of Durham, Greensboro, Reidsville and Winston-Salem, where more than 60% of the country’s cigarettes were produced. Durham was known as Bull City, a nod to the once-popular Bull Durham brand of loose smoking tobacco. Winston-Salem’s nickname was Camel City, a testament to the clout of R.J. Reynolds Tobacco Co.’s popular brand, which had powered the company to the top of the industry and commanded at its peak a staggering 40% market share. Tobacco manufacturing created great wealth, family fortunes that, in turn, financed other industries and philanthropy.

Along with textiles and furniture, tobacco was one of the three legs of North Carolina’s manufacturing economy, employing about 60,000 people and paying nearly $250 million in annual wages. Though state leaders had set aside a sprawling piece of property just south of Durham and in an epic combination of bootstrapping and rebranding called it Research Triangle Park, opened just five years earlier, it was still mostly woods.
 

Despite his title, Luther Terry was neither a surgeon nor a general. He was a physician and an acclaimed cardiovascular researcher raised in rural Alabama who had been appointed the nation’s ninth surgeon general in 1961. His involvement in smoking and health came about after President John F. Kennedy had been asked about the issue at a news conference in May 1962. Not wanting to spook the market, Kennedy hemmed and hawed but promised to look into it. Within a few weeks, he commissioned the study. By the time the Report was finished, Kennedy was dead, assassinated in Dallas, and Congress was beginning the final push on sweeping civil rights legislation.

It’s important to note that although later reports on smoking would be done by the surgeon general, that wasn’t the case here. This was a report to the surgeon general. That said, it was withering.

The committee — formally the Surgeon General’s Advisory Committee on Smoking and Health — had 10 members. Five of them smoked. Its director was Eugene Guthrie, an assistant surgeon general who had been educated at Duke University and UNC Chapel Hill, with a medical degree from George Washington University in the nation’s capital. The committee consisted of eight medical doctors, a professor of statistics and a professor of organic chemistry, both with doctoral degrees. Terry had selected them from a working list of more than 150 doctors and researchers. One key qualification was that no member was allowed to have taken a public position on smoking. They did not do any clinical research; instead, they spent a year and a half reviewing and evaluating existing research and epidemiological studies, building a methodical and sober case for the link between smoking and disease.

Because of the sensitive nature of the committee’s work, the Report was created under tight security, more akin to planning a wartime invasion than a deep dive into a public-health issue. The committee’s rooms were locked. Outside groups could not communicate directly with members. Even putting it on paper was carried out under cloak-and-dagger methods; the Government Printing Office received material in small batches, and only certain pressmen were allowed to work on the document.

In an interview a year after the Report’s release, Guthrie recalled the struggles to produce a document many groups were betting couldn’t be done. The days were long. The pressure was immense. The stakes were high. “Even today,” he said, “I feel about my part in this undertaking somewhat like the man who was asked how he felt about being ridden out of town on a rail: ‘If it hadn’t been for the honor of the thing,’ he said ‘I’d just as soon have walked.’”

The committee understood that the Report’s audience wasn’t just the medical community and politicians. It was the public as well, and in the Report’s summaries, the panel strove to present the findings in clear prose that could be easily understood by people without a medical degree. “Cigarette smoking is associated with a 70% increase in the age-specific death rates of males, and to a lesser extent with increased death rates of females,” it reads. “The total number of excess deaths causally related to cigarette smoking in the U.S. population cannot be accurately estimated. In view of the continuing and mounting evidence from many sources, it is the judgment of the Committee that cigarette smoking contributes substantially to mortality from certain specific diseases and to the overall death rate.”

Just as important as what the committee said is what it didn’t. It claimed cigarettes were not addictive but rather a habit, and it drew a sharp line between tobacco and substances such as opiates and alcohol. “Undoubtedly, the smoking habit becomes compulsive in some heavy smokers, but the drive to compulsion appears to be solely psychogenic since physical dependence does not develop to nicotine or to other constituents of tobacco, nor does tobacco, either during its use or following withdrawal, create psychotoxic effects which lead to antisocial behavior.”

Because of the secrecy, there were no advance copies. Reynolds officials told The New York Times on the day of its release that they couldn’t comment on the report specifically because they had not seen it. In this era before fax machines and email, the company resorted to sending a corporate airplane from Winston-Salem to Washington to fetch some copies.

North Carolina’s elected officials faced a delicate dance. Gov. Terry Sanford, like others, dismissed the findings as recycled research. If there was a problem, he suggested, science would take care of it. “The people of North Carolina, to whom tobacco is of the greatest economic importance, have faith that basic health research ultimately will exonerate tobacco, or it will identify and permit the removal of any hazardous components.” Speaking two months later to the Federal Trade Commission, Sanford suggested that tobacco was not that much different than whiskey or automobiles, products that were potentially deadly when used to excess. And like others, he hinted that it wasn’t just North Carolina that would suffer if smoking declined. Excise taxes were a staple of many state budgets; the federal government itself brought in $2 billion from tobacco in 1963.

About the only major figure in North Carolina who publicly defended the Report was the Rev. Billy Graham. The evangelist urged clergy to quit. “In light of the serious nature of the government report on smoking,” he said, “it will not be a good Christian witness for a clergyman to smoke cigarettes.”

Other politicians noted that people had been warning of the ills of smoking for hundreds of years, very nearly since English settler John Rolfe established the first commercial crop in Virginia in the early 1600s. Which is true but misses the significance of the Report. John Banzhaf III, who was 23 and in law school at Columbia University when the Report was published, went on to a long career as a crusading lawyer against the tobacco industry. What the committee did, he says, was move smoking from an individual health issue to a public-health concern, no different from eradicating polio. It changed the conversation, both in tone and context. “This made it official,” he says. “This was the government stamp of approval.”

Fifty years later, Banzhaf, a law professor at George Washington University, is astonished at what’s transpired to corral smoking in the United States. “If you look at 1964 to the present, we never would have predicted it. No matter where you start, the progress has been remarkable even to those of us in the movement.”


Even before the Report’s release, the cigarette companies had begun experimenting with diversification. Reynolds had bought Pacific Hawaiian Products Co. in Fullerton, Calif., the maker of Hawaiian Punch, in 1962, and it would move quickly in the years after the Report to add other food companies, an oil-exploration outfit and even a shipping goliath. North Carolina’s farmers also had thoughts about branching out. In 1964, they raised $52 million worth of hogs and had been stuck at that level for five years. The next year, hog production increased 20% and has continued climbing. It’s now at $2.5 billion. Similar dramatic rises are seen in turkey and broiler chickens. Livestock — compared with other crops — is now two-thirds of farm income, the inverse of what it was in 1964.

N.C. Commissioner of Agriculture Steve Troxler grew up on a tobacco farm in northern Guilford County. After graduating from N.C. State University in 1974 — 10 years after the Report — he became a farmer, growing wheat, soybeans and, yes, tobacco. It was still a good time to raise it. Prices were high; the export market was booming. In addition, tobacco was regulated through a quota system that controlled production and, in the process, acted as a price support. The quotas, or allotments, were assigned by county and could be rented to other farmers, such as Troxler, who wanted to expand. The system ended in 2004, after declining smoking rates and imports of foreign tobacco led to a sharp decline in demand for the higher-priced domestic leaf.

Troxler has watched animal production in the state grow, particularly in the flatlands along Interstate 95. “Necessity drives innovation,” he reminds. Tobacco is still the state’s most lucrative legal leaf crop, but the elimination of the quota system led to consolidation. Larger farms can get the economies of scale to meet the needs of domestic cigarette companies and also compete on the world market. The Report certainly mattered, Troxler says, though cause and effect is hard to pin down. “My sense is that it probably would have happened over time anyway.”

Grey Morgan is the chairman and chief executive of Mount Olive-based Southern Bancshares Inc., which has $2.2 billion in assets and more than 70 branches across eastern North Carolina and southern Virginia. He began his career making farm loans in Fayetteville for Farm Credit Service in 1975, when the tobacco business was still rolling along. “Tobacco is what we always looked at, as far as the farmer paying his loan back. It was just a dependable crop.” Southern still makes loans to tobacco farmers, but much of its agricultural lending is in swine production, which offers some of the same predictability that tobacco used to.

He also notes with regret that, with consolidation and mechanization, the tobacco harvest is no longer the communitywide event it once was. With the loss of the small farmer, the tobacco markets and warehouses where the auctions took place have closed; farmers now have contracts to sell their crops to specific cigarette companies or their suppliers. It’s more business and less culture, a way of life now vanished. “Tobacco has generated a lot of revenue for this state,” he says.

 

When the Report was released, it wasn’t exactly a secret that cigarettes might not be good for you. In 1952, Reader’s Digest published its exposé “Cancer by the Carton,” and two years later, the American Cancer Society said smokers had a higher risk of the disease. But its major impact was to accelerate the expansion of filtered cigarettes such as Reynolds’ Winston brand and drive smokers away from the traditional favorites such as Camel and American Tobacco’s Lucky Strike. Winston, introduced in 1954, became the nation’s best-selling cigarette brand in 1966 and would remain so for a decade. The industry’s other response was to double down on public relations and advertising, forming the New York-based Tobacco Industry Research Committee, which published its own studies.

It was against this backdrop that North Carolina’s political and business leaders began to slowly steer the state’s economy away from its reliance on its traditional manufacturing base. Research Triangle Park had been established in 1959 as a cooperative venture between the state and Duke University, N.C. State and UNC Chapel Hill. But progress was slow. In the first five years, there were just two tenants, the Research Triangle Institute (cover story, November 2012) and Chemstrand Corp., which had moved from Decatur, Ala. In January 1965, a year after the Report, the federal government announced that it had selected Research Triangle Park for its $70 million National Environmental Health Sciences Center. Four months later, the state hit the mother lode when Armonk, N.Y.-based IBM Corp. said it would build a 600,000-square-foot research operation on 400 acres in RTP. Since then, the park has become world-renowned.

The timing of RTP’s breakthrough in relation to the Report raises an interesting question that parallels the debate on the link between smoking and health: Was it correlation or causation? Coverage at the time credited the state’s win on the environmental-research center to politics, including strong ties between Sanford and then-President Lyndon B. Johnson. Michael Walden, an economics professor at N.C. State, says cause and effect is hard to assign when understanding something as complicated as the shift in North Carolina’s economy the last 50 years. “Did the surgeon general’s report play a role in that shift?” he asks. “I think it did.” That said, Walden adds that automation on the manufacturing side and foreign competition on the farming side were already starting to pressure the state’s tobacco industry.

Concern about the future of tobacco, Walden says, preceded the squeeze on textiles and furniture and, in that regard, forced the state’s leaders to re-examine North Carolina’s economic base and to invest in education as a tool to transform the workforce. At some point, it became clear to the state’s political class: “We can’t fight this, we have to move on.” Instead of the three-legged stool of traditional manufacturing, he says, North Carolina recruited, nurtured and created a five-legged economy built around pharmaceuticals, technology, food processing, financial services and vehicle parts.

In 1964, at least publicly, the idea of creating a new economy seemed like jumping ship. In editorials in the state’s newspapers, the tone was one of circling the wagons rather than blazing a trail. The exception was The Charlotte Observer, and its words are perhaps the most prescient and most liberating of the day. Some of that freedom sprang from the fact that the Queen City lacked a cigarette plant and its metro area was not heavily invested in raising tobacco. “North Carolina and other states with a heavy reliance on the tobacco industry have been given a warning,” an editorial read. The Report “is an unequivocal warning to smokers, prospective smokers and states that lean heavily on tobacco for economic support.”

It also was, of course, a warning to corporations, and Reynolds wasn’t the only cigarette company to take heed and diversify. New York-based Philip Morris Inc. would buy Milwaukee-based Miller Brewing Co. and Glenview, Ill.-based Kraft Inc. American Brands Inc., the Deerfield, Ill.-based successor to American Tobacco Co., moved into locks and liquor. Lorillard Corp., headquartered in Greensboro, was controlled for a while by the same family that controlled CBS Broadcasting Inc. in New York. Then the pendulum swung back. Today, the big three cigarette companies — Reynolds, Lorillard and Altria Group Inc. (the Richmond, Va.-based successor to Philip Morris) — have almost no interests outside tobacco. And they’ve pulled off a remarkable trick. Volumes have steadily dropped. The cost to consumers has increased. Restrictions on smoking are tighter. Yet, year after year, they deliver profits and dividends that are the envy of corporate America. When Woonsocket, R.I.-based CVS Caremark Corp., the nation’s largest pharmacy chain, announced last month that it would stop selling tobacco products, the stock markets shrugged.

In the immediate aftermath of the Report, several conflicting things happened. First, fewer people smoked. By 1965, a year after its release, the rate among American adult males had dropped from 59% to 52%. For female smokers, it slipped from 32% to 29%. But per capita consumption stayed the same, at right around 4,000 cigarettes for every American adult. That meant people who still smoked were smoking more, and they also were switching to filtered brands, in the process reordering the cigarette business.

Six days after the Report, five U.S. senators, led by Oregon Democrat Maurine B. Neuberger, introduced a bill that placed cigarette advertising and labeling under the control of the Federal Trade Commission. Neuberger worried that, after the impact of the report had abated, the tobacco companies would advertise their way out of the jam. “What modern government would permit the use of the public airways to lure customers to a recognized lethal habit?” she asked. At the time, cigarette-makers spent $200 million on advertising, 70% on TV commercials, which was 8% of the three networks’ total revenue. Neuberger’s legislation was passed the next year, requiring a warning label on the pack but not on advertising. Four years later, Congress approved more restrictions, including a ban on television and radio advertising. The last broadcast ad ran in 1971.

Throughout this period, the cigarette industry’s volumes stayed relatively strong. It was only after the federal government doubled the excise tax to 16 cents a pack in 1983 that rates started falling. Today, only 19% of U.S. adults smoke. Total industry production is 286 billion cigarettes a year, compared with the peak of 633 billion in 1981. North Carolina was the last state to add an excise tax, 
in 1969, at 2 cents a pack. It’s now 45 cents.

Ferrel Guillory, a journalism professor at UNC Chapel Hill and fellow at Durham think tank MDC Inc., is a longtime observer of the changes in North Carolina. He says the Report was a psychological blow, a blemish at the time the state was trying to craft an image as the most progressive Southern state. It’s one thing for everybody to privately acknowledge a problem; it’s another for the government to broadcast that news far and wide. “It put a lot of the state on the defensive,” Guillory says. Even as late as the 1980s, the state’s politicians were proclaiming tobacco was still king, while trying to figure out how to reduce dependence on the wealth it created through its cultivation and manufacture.

The demise of the tobacco-support program with the consolidation of cultivation that followed is one reason some rural communities are suffering, Guillory says. “The good news is that North Carolina survived the decline of the tobacco program and the demise of smoking as an American habit in much better shape than was ever imagined.”