Monday, September 22, 2008

James Buchanan Duke

James Buchanan Duke (1856–1925) is a hero of capitalism who revolutionized the manufacturing, distribution, marketing, and sales of consumer products. Duke specialized in tobacco, but his innovations spread throughout dozens of other industries, making consumer products cheaper and more available around the world.

Duke began his career as a small tobacco farmer and distributor with his father and brother in Durham, North Carolina. In the 1870s, most tobacco in the United States came in the form of snuff, pipe tobacco, chewing tobacco, and cigars. Although cigarettes had been an available form of consuming tobacco for many years, the slow hand rolling process and need for special leaf blends made them not widely available.

In the 1880s, Duke decided to switch his company's production from varied tobacco products to cigarettes. Using the local "bright leaf" tobacco that had been popular with Civil War soldiers, he sought a means of reducing the expense and time required to make cigarettes. Although he had enticed many skilled laborers to relocate from New York to Durham, he eventually found the breakthrough he needed in James Albert Bonsack.

Bonsack had invented a mechanical cigarette rolling-machine. Duke bought Bonsack's machines and began working with him to improve them. Initially, the machines could make 70,000 cigarettes per day (compared to 3,000 per day for an average skilled laborer), but after the improvements, they could put out 120,000 per day. 

With secure, cheap production in place, Duke rapidly expanded his business and made cigarettes popular throughout the country and throughout the world. By 1890, Duke's American Tobacco Company could make over 800 million cigarettes per year. A decade later, the company had been vertically integrated to include everything from tobacco farms, curing, warehousing, production of cigarettes, purchasing, packaging, distribution, and sales. The company made over 3.78 billion cigarettes per year.

American Tobacco not only revolutionized cigarette production, but was also responsible for introducing the first baseball cards, helping to create the concept of branded merchandise, and using middle management to coordinate sales and production. Duke's own later accomplishments included helping his brother co-found Duke Power (now Duke Energy) and endowing Duke University.

Sources:
Robert Durden, Bold Entrepreneur
Profile at Duke University
Wikipedia profile

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