Paper short abstract:

This communication questions tobacco fiscal potentials. We show that relative prices pushed the demand up and trade flows connecting Brazil to West Africa solved supply bottlenecks. Market growth was not reflected on the value of the farm, so the state reaped the smallest share of the benefits.

Paper long abstract:

The fiscal impact of the crown's tobacco monopoly in the domestic market has been a well-studied topic in the Portuguese history of the late Ancien Regime. The issue is mostly observed through the standpoint of either the crown or the elite of businessmen who caught this rent. Yet, a recent research on the contractual arrangements regulating the farm of monopoly rights found evidence that this was not a good business for the financiers well until the middle of the 18th century. In this communication we argue that any rent, albeit based on monopoly regime, rested also on economic trends and relative prices of tobacco, which has been a missing link in this tale of misfortune or of success of either parties involved in the contracts. We assume that changes in clauses of contracts (the term of the farm and value of lump sums) benefited the contractors, providing the market kept expanding. We present an integrated view on a) the evolution of the value of the farm; b) relative prices of tobacco in the Portuguese market; c) exports to alternative markets (African Coast mainly and not so much Spain). We check whether the macroeconomic backdrop of the contracts changed. Given the positive trend in domestic market and the chance of extending the term of contracts, the state became the party which reaped the shortest benefits of this colonial commodity.