In his 1936 short story “The Verger,” W. Somerset Maugham provides a parable for how economic liberty rewards the canny, intrepid owner of a small business no matter how humble his origins.
In the story, Albert Edward Foreman is the verger at St. Peter’s, an old church in Neville Square. Like many of his kind, this verger—the Anglicans’ official church assistant or caretaker—has been serving conscientiously for years, wearing his robes out over time but preserving them to honor both his work and its traditions. When a new vicar arrives at St. Peter’s, he is scandalized to learn that the verger is illiterate. Foreman had been raised “in service,” meaning he had worked as a house servant and was of peasant extraction. He never had much cause to learn to read and isn’t interested in remedying this so late in his life. The new vicar fires the verger.
Dismayed, the normally clean living ex-verger seeks out a pack of Gold Flake cigarettes to calm his nerves, but he cannot find a tobacconist near St. Peter’s. Upon reflection, he decides to fill this niche and become the area’s tobacconist. He starts a shop with his savings. It thrives. Then he walks around other London neighborhoods in search of under-served areas that could use a tobacconist. Soon he has a number of thriving stores.
Because of his success, Foreman decides to open a bank account in which to keep his profits, and the bank clerk happily accepts the deposit with only the request that Foreman read over the agreement and sign his name. The ex-verger admits that he cannot read it, and the banker can’t believe an illiterate could ever accumulate such wealth. He wonders aloud to Foreman what the ex-verger could have been had he actually learned to read, and Foreman responds, to conclude the story, “I’d be the verger at St. Peter’s, Neville Square.”
Maugham’s story celebrates economic liberty, but it also heaps scorn on the social and economic elites in England. The old vicar had taken on a verger of humble origins to fill an old and sacred office that afforded a man of service greater respectability and independence. The new vicar wants vergers to resemble the vicar himself and would rather folks like Foreman be pushed out, and to suffer for their failures. The bank clerk, though somewhat kinder, detects an injustice in the successful commoner: he cannot imagine an illiterate old servant’s amassing greater wealth than he, an educated man, has.
The irony is that the very education the new vicar and the bank clerk secured has blinded them to opportunities beyond their own kind of service—to the state church or to a large, established business. Even the old vicar was suspect in that he discounted the possibility of Foreman’s accomplishing anything higher than serving aristocrats or the state church.
In contemporary American politics, the vicar and bank clerk are having their revenge. With its holding in FDA v. Brown and Williamson Tobacco Corp. (2000), the U.S. Supreme Court found that the Food and Drug Administration lacked the authority to regulate tobacco products. The result was opportunity—and a cigar-production “golden age” like that of the ongoing craft beer renaissance. Old, established companies like Davidoff released new lines of cigars, and startups like Rocky Patel, Tatuaje, and Blanco began innovating in blends. However, from 2007 until 2009, the Family Smoking and Prevention and Tobacco Control Act made its way through the U.S. Congress. It reached President Obama’s desk in 2009, he signed it, and the FDA now had its long-sought authority to regulate tobacco.
For the first few years the agency kept its attention on cigarettes, but it recently moved to consider premium cigars. FDA officials spent months mulling over the relative strength of the regs it would apply, but ultimately decided to subject cigar manufacturers to the harshest level of scrutiny. They claim, with scant evidence, that cigar manufacturers are marketing to children and that smokers are unaware of the potential health hazards associated with tobacco consumption.
It’s hard to imagine total unanimity within the FDA about going forward based on such unproven claims; but even if there were some qualms about that, one feels sure the costs of complying with their new handiwork weren’t considered at all. The regs will require submission of all post-2007 (older blends are grandfathered in) blends to the FDA for approval, and the firms will have to pay for the review. They are obliged to even as they lose out on revenues due to the opportunity costs the regulatory regime imposes. The regulations will have no obvious benefit to the public, but it is quite clear they will increase the costs for cigar producers, vendors, and enthusiasts.
The results can be predicted with dreary certainty: smaller manufacturers will close their doors, or merge with larger ones that have the economies of scale to absorb the costs of compliance. The quality of the cigars will decline as margins shrink. As quality declines, manufacturers will cut back on labor. Vendors will suffer as prices increase to cover regulatory compliance costs even as the quality of cigars declines. Bottom line: a luxury that had always been affordable to a wide swath of consumers will come to be largely reserved for contemporary vicars and bank clerks, who do not smoke cigars anyway.
Large manufacturers like Davidoff and the Scandinavian Cigar Group not only can absorb compliance costs and delays but can benefit from the grandfather clause that protects some of their inventory from regulation. Smaller firms are largely newer and produce post-2007 blends. They probably only employ a dozen or so employees in the office, dedicating much of their resources to procuring skilled labor and quality leaves. These product lines, started too recently for grandfathering, will have to be pulled from the market by the smaller manufacturers, and wait for official vetting by the FDA, otherwise vendors will risk fines for selling them. But small firms cannot wait for FDA scrutiny. The firms will likely close, thus expanding the market share of the large tobacco corporations protected by grandfather clauses.
The cigar world has at its origins folks like the fictional Albert Edward Foreman in “The Verger.” Davidoff began during the early 20th century with a Jewish tobacconist family in Kiev, Ukraine. José Orlando Padrón fled communist Cuba and began manufacturing his cigars in Miami to meet the demand for cigars that the U.S. embargo had rendered unmet. He was one of the first manufacturers to use Nicaraguan leaves, and Padrón cigars are now among the greatest cigars in the world. More recently, the Blanco family started Blanco Cigars in 1998; the father-son team running the operation had served in the U.S. Army and law enforcement before returning to the cigars at the heart of their Cuban heritage.
The shops that specialize in selling cigars are full of ex-vergers, too. At my old cigar shop in Gettysburg, Pennsylvania, the elderly owner was from an old Irish Catholic neighborhood in Philadelphia. He left the city, where his business contended with a high incidence of crime, to start a Civil War merchandise business in Gettysburg and later opened a cigar shop because of his own passion for cigars. His manager is a U.S. Army veteran who confesses that he is not terribly interested in college but nonetheless works to keep the shop open and thriving. The two have done well enough to open a business in a new location in nearby Chambersburg, and the manager of the new shop is a Penn State graduate who could not find work in his field but proved an excellent tobacconist.
An African American couple runs my favorite spot in Charlottesville, Virginia. When I was last there, they were having an impromptu family reunion, since the shop has become a center of activity with relatives always coming through the place. They are not rich, but they make an honest living.
Cigars used to be a cliché: the prop in the fist of the heartless industrialist, who took draws in between making deals that crushed the souls of the workers. Now, cigar smoking is a pastime of the working class. It is an affordable luxury among veterans, pipefitters, retirees, cops, landscapers (and the occasional political science professor). Other than attending church services, smoking cigars at a shop is one of the few activities that bring folks from diverse backgrounds and classes together. To be sure, cigars are not terribly good for a smoker’s health. But the risks associated with cigars are well known and built into the choices that smokers make.
The costs imposed on these families appear less well-considered. After all, regulating them out of their businesses and their jobs is not terribly good for their health, either.
Finally, it is worth noting that a large number of manufacturers, workers, and vendors are Latino—ranging from Cuban to Nicaraguan to Mexican—which would mean that the FDA regulations could be expected to have, in the bureaucratic phrase, a “disparate impact” on these populations. Does the FDA want to be responsible for putting so many men and women of color out of work?
These are the ex-vergers of today—the ones who sought American opportunities to start new businesses and develop new skills. They may not have the skills our contemporary vicars and clerks value, but they have proved their willingness to step off in a new direction in life, and they have been apt students of the consumer demand for the occasional stogie. Now the federal government wishes to stop them before they ever secure the earnings that their labor would deserve.
These regulations went into effect on August 8. As one cigar enthusiast and blogger, Bryan Glynn, announced, “The golden age of cigars is over.” Compared to the failed coup in Turkey or the wild presidential election we are in, this pronouncement may not feel as compelling. It might even sound like good news for those who hate cigars. However, it is important to note that these regulations came down during a period when the creation of new businesses in the United States is in steep decline. At a time when our chattering classes—our vicars and clerks—wring their hands over the fate of less educated Americans, they move to stifle what were, up to now, perfectly legitimate enterprises.
The fewer who step out onto the town square to try to make new business activity happen, the worse off we are. So in solidarity with those seeking economic liberty, pour your favorite beverage and light up an A.J. Fernandez New World in Toro or a Blanco Nine Lancero.
Or don’t. It’s your choice. Or, rather, it was.