In the 17th and 18th centuries, farms in North Carolina struggled with the poor soil in the coastal plains, which was unsuitable for growing grain on a large scale.

Then a slave came up with the innovation that led the state to become a leader in tobacco growing. He used charcoal, whose intense heat cured the tobacco quickly, resulting in a flue-cured tobacco. Within a decade, this tobacco became one of the most common varieties.

Tobacco users' tastes were also changing. Previously most of the tobacco was processed into snuff or pipe tobacco. In the 19th century, cigarettes became popular. American growers began processing their own tobacco in small factories. These businesses led to the development of improved transportation and trading centers in cities like Durham and Winston.

A few large farms produced most of the state's tobacco, but there was enough demand to enable small farmers to survive. Manufacturers responded to the growing demand by building larger factories, employing thousands of workers.

In 1880, manufacturers based in North Carolina produced 2 million pre-rolled cigarettes. Five companies held 90 percent of the cigarette market. They merged to form the American Tobacco Company, which controlled the majority of the world tobacco trade. A Supreme Court antitrust ruling dismantled the company in 1911.

Larger farms controlled most of the tobacco production, but even small tobacco farmers could make a profit. Sharecropping and tenant farming became common among people who did not own any land. Many African-Americans in eastern North Carolina were sharecroppers who paid a portion of each year's crop as "rent" to large landowners. As late as 1923, nearly half of the state's farmers were tenants.

During the Great Depression, farmers tried to compensate for lowered prices by producing more tobacco, which led to even lower prices. In 1938, the government introduced a quota system of strict limits on how much each farm could produce.

The tobacco industry began to recover at the outbreak of World War II, as soldiers were given cigarette rations. Postwar prosperity also boosted demand for cigarettes. In the early 1960s, concerns about the dangers of cigarettes arose, and smoking became a major public health issue. The US Surgeon General issued a report in 1964 arguing that smoking caused lung cancer and other medical problems.

Over the next fifty years, the number of American smokers declined steadily and restrictions on public smoking increased. The large tobacco manufacturers began laying off workers and relocating factories to less expensive areas. American Tobacco left Durham in 1987, and R.J. Reynolds left Winston-Salem in 1989. In 2000, the last cigarette manufacturer, Liggett and Myers, left Durham. The most profitable market for cigarettes in the past decade has been in Asia, and American companies have invested heavily in overseas factories to lower their costs.

The demand for domestically produced tobacco decreased. Many farmers stopped growing tobacco. The quota system ended in 2005, as part of a $10 billion package to end federal price supports for tobacco growers. The Tobacco Transition Payment Program (TTPP) provided farmers a series of annual payments. This program also ended restrictions on tobacco farmers, but analysts predicted that the majority of growers would stop growing tobacco.

Source: North Carolina & Tobacco: Historical Background
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