How the Nazis made a fortune out of cigarettes

Adolf Hitler was opposed to smoking, he talked of banning it but on the other hand he did appreciate big cars, nice hotels and an easy life. Cigarettes were big money and controlling the habits of hundreds of thousands of smoking SA men was clearly a winner.

Businesspeople Arthur Dressler and Ernst Stephan spotted this opportunity, particularly given their contacts in the SA. Dressler was a friend of SA leader Ernst Roehm. One of the most important costs in cigarette distribution was advertising. With a captive market who could take care of their own publicity, funds would thus be freed which could be put to other uses. One of these uses could be under the table payments to ensure the future success of the business.

The problem was finding the cash to start a factory. The S.A. had around 30,000 Reichsmarks to invest but that would not go very far. In stepped Jacques Bettenhausen with an investment of half a million marks. As a result Zigarettenfirma Sturm was founded, and registered as the Cigarettenfabrik Dressler on 4 August 1929.

The factory mainly produced four brands: Trommler (Drummer in English), Alarm, Sturm (Storm) and Neue Front (New Front). They had different price levels "Neue Front" was the most expensive brand, at six pfennigs; "Sturm" cost five, and "Alarm" four. "Trommler" was the cheapest at 3 and one third pfennigs and, not surprisingly was the most popular. By the time of the National Socialist seizure of power, they represented 95% of the company sales. Cigarette consumption doubled under the Nazism.

Lets have a look at some figures. There were three million in the SA at the time of the seizure of power, lets say half of them smoked 15 cigarettes per day, that is 22 and a half million cigarettes. The S.A. were getting a kickback of 20 pfennigs per 1,000 cigarettes. That is around 4,500 marks per day or in today’s money around 17,500 euro, around 6.2 million euro per year. That is outside of any dividends for shareholders or donations to the party. In 1932, the year before the seizure of power, Cigarettenfabrik Dressler had a turnover of 36 million Reichsmarks, very approximately around 140 million euros in today’s money.

However not only were they a money spinner, packets could also contain messages as could the collectable cards inside, as did the football cards that would be found in British cigarette packets of the time. Packets were a comparatively new invention, they came out in the mid 1920s. The messages on the packets and cigarette cards were initially against big business and promoting what the company considered to be the aims of the working man before taking on a decided military aspect.

S.A. members were only allowed to smoke cigarettes from these companies and if they were found with other brands they could be fined. In order to encourage non party members to use their brand, they could smash the windows and assault staff of shops selling other brands.

In June 1932, Philipp Fürchtegott Reemtsma, owner of the Reemtsma cigarette company, met with Hitler, Hess and Hitler’s former sergeant and now head of the Nazi party's publishing company, Max Amman. Reemtsma had described the business in words similar to a little bit of paper, a gram of tobacco and a lot of advertising. Reemtsma 's advertisements had been banned from Nazi party publications, and as a major advertiser this was a serious loss for Amman. At that time, Reemtsma advertised in publications across the political spectrum.

Reemtsma had a problem of declining sales in areas where the Nazis were strong. For example, in the area of East Saxony around Dresden where the Dressler company was based, sales had dropped from 65 million units in 1931 to 41 million units in 1932. This was clearly not sustainable.

Another problem had been the violent attacks and boycotts of his company and its products organised by the Nazi press.

With this new relationship established, Reemtsma was able to befriend the head of the Gestapo, Hermann Göring, with an annual gift of one million marks. There was also a trumped up case of corruption against Reemtsma, filed in April 1933. Goering was also able to have a legal case against Reemtsma dropped for three million marks. Officially this money was paid to a fund for the good of German forestry and the Prussian landscape but in effect it all went towards building Goering’s private estate at Karinhall. To ensure everything was good all round, Reemtsma made donations to the National Socialist party.

Hitler had the leadership of the S.A. killed in the Night of the Long Knives. This meant that the political backers of the Zigarettenfirma Sturm were now dead. The new S.A. Chief of Staff, Viktor Lutze, switched his loyalty to Reemtsma, cancelling the Sturm contract. Reemptsma paid a fixed annual fee of initially 250,000 reichsmarks to produce the S.A.'s cigarettes as well as a one off payment of 150,000 reichmarks in 1934.