Stop No. 2: The political economy of the tobacco monopoly
By the late 1870s Europe and America had established leadership in the processing and marketing of tobacco, and they were strongly pushing the import of raw materials and export of finished product. Japan, a latecomer to capitalism, hoped to break those nations' market dominance and stem the huge amounts of tobacco it imported from them. Consequently, it began to promote modern techniques of cultivating and processing tobacco, and in 1904 established a government tobacco monopoly. The following year its colony Taiwan followed with its own law giving the state a monopoly over tobacco. The purpose of the law was to strengthen the financial resources of the governor-general's office. Early in the Japanese era the government would also grant itself a monopoly over opium, salt, camphor, matches, alcohol, weighing and measuring devices, and gasoline.
In 1912, the Taipei Tobacco Factory, which was only one-sixth the size of the Songshan facility, was finished. The Monopoly Bureau no longer contracted out the processing of tobacco products to private companies, and it began to exercise full control over the tobacco process, from cultivation, to research and development, to production and sales.
In 1937, militaristic Japan budgeted the huge sum of ¥2.6 million to build the Songshan plant over three years. It was expected that the plant would be able to turn out 2 billion cigarettes a year. Apart from supplying the Taiwan market, the plant was also expected to supply troops in various areas of Japanese control, including central China, southern China, and the South Pacific.
In 1943, the situation in the Pacific theater of the war had changed, and allied forces began to carry out bombing raids on Taiwan. The Songshan factory, the largest cigarette plant in Southeast Asia, was very fortunate to escape unscathed. When the seat of the ROC government moved to Taiwan after the war, the Taiwan Provincial Government took over the Japanese government's monopoly powers, and named the plant the "Songshan Tobacco Factory of the Taiwan Provincial Government's Tobacco and Wine Monopoly Bureau." What didn't change was the factory's mission to bolster the government's finances.
Production records from 1959 show that the factory produced 5.8 billion cigarettes and 430,000 cigars that year, which equaled half of total provincial demand. Production value peaked in 1987 at NT$21 billion.
During the period of government monopoly, cigarettes had a completely different image from the way they are regarded today as agents of harm, as the "factory song" on a wall of the factory bears witness: "...When talk is flowing smoothly, a cigarette after wine or tea boosts your health. Their sales bolster the national treasury, and sent abroad they bring glory to the nation!"