accounting and quality control in the royal tobacco factory of seville, 1744-90: an historical...

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Accounting and qualitycontrol in the RoyalTobacco Factory ofSeville, 1744-90: anhistorical perspectiveMaría J. Álvarez , Fernando Gutiérrez &Domi RomeroPublished online: 01 Oct 2010.

To cite this article: María J. Álvarez , Fernando Gutiérrez & Domi Romero(2002) Accounting and quality control in the Royal Tobacco Factory ofSeville, 1744-90: an historical perspective, Accounting, Business & FinancialHistory, 12:2, 253-273, DOI: 10.1080/09585200210134947

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Accounting and qualitycontrol in the Royal TobaccoFactory of Seville, 1744–90:an historical perspective

María J. Álvarez, Fernando Gutierrez andDomi Romero

Abstract

Studies in the history of accounting have, to date, centred on the costs and ef� ciencyof productive systems. However, the in� uence of quality assurance in managementcontrol systems is an aspect that has not been studied in detail from an historicalperspective. For that, this study analyses the use made of accounting techniques as acontributory element to quality control in the case of the Royal Tobacco Factory ofSeville, belonging to the Spanish Tobacco Monopoly, during the second half of theeighteenth century.

Keywords: accounting history; quality control; factory management; Spain

Introduction

Over recent decades there have been many studies showing how the use ofaccounting as a calculation technique contributed to improving the managementof companies on the threshold of the Industrial Revolution. Although morerecent studies have demonstrated that this type of use of accounting began muchearlier, some authors like the social theoretician Foucault (1992) emphasize that

María J. Avarez is assistant professor in the Departamento de Economía de Ia Empresa,Universidad Carlos III de Madrid, c/ Madrid 126–128, 28903 Getafe, Madrid, Spain (tel:+34 95 624 96 43; fax: +34 95 624 98 11; e-mail: [email protected]); Fernando Gutierrezis a lecturer in the Departamento de Economía de Ia Empresa, Universidad Pablo de Olavide,Carretera de Utrera Km 1, 41013 Sevilla, Spain (tel: +34 95 434 92 83; fax: +34 95 434 96 39;e-mail: [email protected]); and Domi Romero is a lecturer in the Departamento Direccióny Gestión de Empresas, Universidad de AImería, Cañada de San Urbano, 04120 Almería,Spain (tel: +3491 810 97 76; e-mail: [email protected]).

Accounting, Business & Financial History 12:2 July 2002 253–273

Accounting, Business & Financial HistoryISSN 0958-5206 print/ISSN 1466-4275 online © 2002 Taylor & Francis Ltd

http://www.tandf.co.uk/journalsDOI: 10.1080/09585200210134947

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such management and accounting techniques evolved as a means of supervisingand controlling individuals and thus have been important for the development ofmodern society.

Various researchers in the history of accounting have incorporated theseFoucauldian propositions in their studies, most notably Hoskin and Macve(1986, 1988, 1994), Miller and O’Leary (1987, 1994), Loft (1988, 1994),Carmona et al. (1997) and Ezzamel (1998). For these authors, accountingconstitutes a form of discipline with techniques and procedures by means ofwhich it is possible to know of, and hence in� uence, the activities of theindividual at a distance.

A second line of investigation, while indicating the important role played bytechniques of accounting calculation in the development of industry, explainstheir appearance from a strictly economic perspective. Representative of this lineof research include: Johnson and Kaplan (1987), who maintain that thedevelopment of costing systems represented a rational response of businesses tomarket opportunities; Fleischman and Parker (1990, 1991), who explain the useof costing techniques for reasons of market competition and the desire toincrease operational ef� ciency; and Fleischman and Tyson (1993) who argue thatthe intense competition within sectors drove the development of costingsystems.

The objective of this study is to enhance our knowledge of the historicalantecedents of contemporary systems quality management. The study analysesthe use made of accounting calculation techniques as a contributory element toquality control in the case of the Royal Tobacco Factory of Seville, Spain (RTFS)during the second half of the eighteenth century. Using information obtainedfrom the National Historical Archive (NHA) and the Historical Archive of theSpanish Tobacco Company, A1tadis, (HAA) an explanation is given of the usemade of production standards, not only for controlling the output of theworkforce but also for verifying that the speci� ed quality standards were beingmaintained. Our observation period (1744–90) witnessed the deployment of theideas of the Spanish Enlightment into business practice (e.g. through the settingup of royal factories) to increase the quality of life of Spanish citizens. The paperis structured as follows. Firstly, the characteristics of tobacco manufacturing atthat time are introduced. Secondly, the characteristics of the system ofmanagement of quality in the RTFS are described, emphasizing those aspectsparticularly relevant to the control of human behaviour at the various functionallevels. Thirdly, the results are discussed and conclusions drawn.

Tobacco manufacture

In 1636 the monopoly regime for the operation of the tobacco business wasestablished, and this was licensed out through concessions to private individualslater in the seventeenth century. After the Bourbon dynasty arrived in Spain in1701, a series of reforms were introduced extending the scope of theAdministration. In the 1730s it was decreed that the Treasury should directly

254 Accounting, Business & Financial History

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manage the Tobacco Monopoly, and from that time the manufacturinginstallations were constituted as the Royal Factory.

The Tobacco Monopoly witnessed tough competition from tobacco smug-gling. Rodríguez (1994) investigated this market but found it dif� cult todetermine the precise extent of tobacco smuggling. However, he speculated thatit might have been of considerable dimensions, given the stiff punishmentsthat the RTFS imposed on operators engaged in such activities and thefoundation of a section within the Spanish Law Enforcement to � ght tobaccosmuggling outside the RFTS. Lastly, Rodr´õ guez (1994) noted the severepunishment faced by an RTFS superintendent for his involvement in tobaccosmuggling.

For this reason, the General Administration of the Tobacco Agency issued aseries of rules to regulate the operation of the factory. The publication of theserules was effected through certain Instructions that were signed by a seniorof� cial of the Agency and, in some cases, by the Treasury Minister himself.During the period studied here (1744–90), such of� cial Instructions were issuedin the years 1744, 1761, 1779 and 1790, together with a supplement in 1769which completed the Instruction of 1761.

The production of snuff (tobacco in powder) and cigars

Production activity was basically centred on two products during the periodstudied: tobacco in powder, known as snuff, and cigars made from rolled leavesof tobacco. The production process for snuff was complex and long drawn-out intime, consisting of seven distinct stages, designated: Azotea, Monte, Moja,Entresuelos, Repaso, Fermentación and Distribución. This segmentation of theproductive process enabled the ef� cient division of labour.

The � rst stage of the process, Azoteas, involved the exposure to the sun of thetobacco leaves in order to dry them, carried out on the sun-roof (the azotea) ofthe factory building. This was done once the newly-arrived shipments had beenclassi� ed by grade, i.e. by quality. During this stage, it was essential to avoid anyconfusion that might result in the mixing of one tobacco with another. For thisreason it was required that the operatives should work with a certain‘intelligence’, so as not to confuse the leaves destined for each milling. The mainactivities of the operatives employed in this stage of the process consisted ofspreading out, scoring and cutting, and threshing or beating the tobacco leaves.In the Monte stage, the dried tobacco from the Azotea stage was milled, an initialproduct of tobacco powder being obtained after sieving to remove the stalks andveins. This powder then passed to the Moja stage, in which it was mixed withwater and other substances, such as fruits and reddish-coloured sand known asalmegre, which imparted colour and aroma. In the next stage, the Entresuelos, thepowder was spread over the � oor of darkened, well-aerated rooms, in a processknown as oreo or weathering. The Repaso stage involved a second milling which,according to the sources used, used to leave the tobacco ‘as soft as the earlobe’.Next, in the Fermentacion stage, the � ner � nal powder was packed in tins ofdifferent capacities and then stored in the warehouse of the Distribución

Álvarez et al.: Accounting and quality control in the Royal Tobacco Factory 255

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operation, from which it was shipped for consumption to the various Kingdomsof Spain and occasionally abroad. This last stage was carried out by the variousdifferent administrations of the Tobacco Revenue situated in the main cities ofSpain.

The production of cigars, on the other hand, was very much a craft activity.First the leaves of tobacco were distributed among the operatives; then eachindividual worker cut the leaves and rolled them to form the � nal product, thecigar. The worker had to produce a set number of cigars according to pre-determined characteristics of weight, size and colour. In comparison with theproduction process for snuff, the manufacture of cigars was less complicated andfaster, and subject to less potential loss through poor quality. In the decade of the1770s, production of cigars overtook that of snuff, which called for an internalreorganization of the factory.

The internal organization of the factory

The General Directorate of the Tobacco Agency managed the TobaccoMonopoly from Madrid. The most senior management position in the RTFSwas that of Superintendent, who was appointed by the King and to whom all theother managers and workers were subordinate and in fact owed obedience in aliteral sense. However, the power of the Superintendent was limited to the extentthat he was not expected to interfere in matters concerning the process ofmanufacture of the products, which was the speci� c responsibility of theProduction Manager (Director de Labores) (see Figure 1). The Controller(Contador) was responsible for administrative activities and deputized for theSuperintendent, in effect the second in command. Both the Accountant and theProduction Manager were appointed by the Directorate of the Agency inMadrid.

The third-ranking positions in the organization were the Trusties (Fieles) andManagers (Tenientes) of the various departments or stages of the productionprocess. Responsible for all those operatives under their authority, they only hadthe formal powers granted to them in the Instructions derived from thedescending chain of command. At the fourth level were the Supervisors(Capataces) who constituted a line of intermediate controllers whose functionwas to mediate between the operatives and the Trusties; these had responsibilityfor the direct supervision of the manufacturing work done by the operative andreported results to the corresponding Departmental Manager or Trusty. At thelowest level in the hierarchy were the operatives responsible for the work oftransforming the product at each stage, providing the value-added.

The labour force employed by the RTFS during the period of this study wasentirely male in both the production of snuff and the manufacture of cigars, thisbeing due to the need for physical strength in the � rst case. The compensationsystems established for each product division, and the periods of time for whichworkers were contracted, provide a means of classifying the labour into threecategories: employees, snuff production operatives, and cigar manufacturing


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operatives. The � rst group, employees, were staff who were contracted for aninde� nite period and paid monthly in relation to their grading or level. Theoperatives of the cigar factory were contracted on a week-to-week basis; theywere grouped into teams (Ranchos) of 10–15 workers, and were recompensed onthe basis of the number of cigars they rolled from an initial quantity of rawmaterial (leaves), provided that the � nished product conformed to thespeci� cations of colour and size laid down. The operatives of the snuff factorywere contracted and paid on a daily basis. These latter workers were expected toprovide strength more than expertise, the jobs requiring the handling of horses(which were the only source of power for the mills), mills with heavy stones andmixing troughs. These workers were paid a � xed wage per day, dependent ontheir grading or level.

The management of quality

Since the main theme of this study is quality, it is important to de� ne what wasunderstood by this concept in the chronological context, more than two hundred

Figure 1 The organizational structure of the RTFS


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years ago. The of� cial Instruction of 1744 refers to an aspect of quality, in thefollowing terms:

The practice to be adopted is for the leaf to be exposed on these sunning roofsnot at times of greatest heat but when it is more moderate, taking the greatestpossible care that the exposure should be precisely limited to achieve therequired juice/liquor content, avoiding the well-known problem of excessiveevaporation . . . By following this rule, a good quality of tobacco will beassured . . .

(Instrucción General, 1744: 2)

Quality was clearly identi� ed with obtaining a product in accordance withpreviously determined speci� cations, assumed to be the best to encourageconsumption. It was an aspect that formed an important part of the managementof the RTFS for three reasons. The � rst was that the consumption of tobaccowas subject to taxation, with the revenue thus raised being destined for the RoyalTreasury. The relative importance of the Tobacco Revenues in the total amountsraised by taxation reached very signi� cant levels as illustrated in Table 1.

In the light of the importance of the Tobacco Revenues, the interest taken bythe General Directorate of the Tobacco Agency in the tobacco business is veryunderstandable. In a very direct way, it was admitted, in a letter sent from theRTFS to the Directorate in Madrid, that: ‘this source of revenue has always beenthe one treated with the most care by the ministry, and only the best selectedSuperintendents, Director and General Administrators have been appointed forthis . . .’ (NHA, Legajo, 1790).

The second reason was the importance of product quality as a differentiatingfactor in potential value. The products manufactured by the RTFS were ofhigher quality than those available as contraband, although the illegal productshad the considerable advantage of being cheaper (Carmona et al., 1997).

The third and last reason explaining the interest in quality was that this wasconsidered vital in ensuring an increase in demand, and hence a continuinggrowth in the revenues of the Royal Treasury. In the correspondence maintainedbetween the Factory and the Government, the reductions suffered by the

Table 1 Contribution of the Tobacco Agency to the total revenue of the Spanish RoyalTreasury, 1730–75

Year

Total revenues of theRoyal Treasury(000 vellons)

Income derived fromthe Tobacco Agency

(000 vellons)

Contribution of tobaccoto total revenues

(%)

1730 183,592 34,557 18.821731 171,427 36,098 21.061736 185,609 46,770 25.201741 191,530 56,507 29.501751 244,927 71,588 29.231775 333,041 93,508 28.08

Source: Artola (1982: 310-11)


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tobacco revenues during the period 1764–68, due to a decline in the levels ofconsumption, were speci� cally attributed to the incorporation of a newSuperintendent with no experience of the tobacco production processes and theresulting decline in quality (NHA, Legajo, 1790).

Quality and the snuff and cigar factories

Considering that the production activity comprised two well-differentiatedmanufacturing processes, for snuff and cigars, product quality was important fordifferent reasons in each area. In the case of snuff, the production process wascomplex and long drawn-out in time between raw material input and the outputof the � nished product. In between was a chain of various stages of production,each contributing added value to the product. Therefore it was important tominimize errors and incorporate advantages at each stage so as to enhance thevalue of the � nal product. This policy was decreed in the Instructions fromwhich the following extract is taken:

The Inspector will take care . . . that not all the � or (the best quality powder)is used up, leaving behind the siftings (standard quality material), and by thismeans avoiding the problem of perfecting the second milling process whichthe tobacco must receive . . .

(Instrucción General, 1761: 1, 12)

The complexity of the production process of tobacco in powder was thereason why the General Directorate of the Tobacco Agency imposed the verydetailed regulation of all the factors that could in� uence the quality of theproduct, speci� cally in order to compete with the products available on the blackmarket. Thus, special attention was paid to maintaining the machinery and toolsinvolved in the production process in good physical condition:

The supervisors themselves will personally ensure that all the machinery andstables are serviceable and in use for the milling; that the mill-stones areroughened by the stone-cutters whenever this is needed and that theyare correctly positioned; that the mortars are � at, not concave, well-chippedand in condition so that all the surface of the mill-stone functions well.(Instrucción General, 1779, Instruction to be observed in the Monte ormilling workshop: 54)

It is interesting to note that numerous experiments were conducted with aview to introducing new machinery to improve the product quality. Suchpractices, we argue, were motivated by the ideas of rationalism and experientialknowledge that characterized the Enlightment. Interestingly, some of the main� gures of the Spanish Enlightment (e.g. Mr Jovellanos, who later became theMinister of Justice, and Mr Olavide, the Mayor of Seville) were involved inthe undertakings of the RTFS as external consultants during the 1770s. Anexample of these experiments was the use of new sieves which were brought intouse not only to help improve the quality but also to reduce the volume of wasteor scrap (NHA, File, 1790). Furthermore, account was taken of the importance


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of the methods of working for the achievement of quality targets. For this, therewere rules laid down for the actions to be taken in each of the separate stages ofthe process, who should carry out which tasks, and what physical characteristicsshould be met, demanding for instance that only robust men, of good height andaged between 18 and 30 years should be employed (Instrucción General, 1779,Instruction to be observed by the Works Directors, and their correspondingcapabilities/authority, 25). This was an important factor in the case of theproduction of snuff since physical strength was needed to handle the mills andthe horses that powered them. Lastly, the physical conditions of the workingenvironment were also taken into account, so that these should be the mostsuitable for obtaining a high quality output. Even the burning of waste andthe sweepings from the factory was regulated, together with the cleaning of themixing troughs (every 3 days) and the daily sweeping of the � nished productstorehouse (the Fermentación section) (Instrucción General, 1790, Regulation forthe good governance, economy and policing of the Royal Tobacco Factories ofsnuff and cigars, of Seville, Concerning the policing, 39, 280–2).

In relation to the manufacture of cigars, the process was much simpler. Thiswas a craft activity requiring specialized labour. As previously described, thework consisted of the distribution of the raw material among the workers whothen individually cut the leaves and rolled them into the � nal product. Qualitywas also very important here because it was converted into a measure of theworker’s performance or yield. While the production had to conform tothe quantitative speci� cations, it was important that the output should alwaysmeet the quality speci� cations previously laid down. In this case, too, themethods of working were seen as important in achieving the required qualitylevels. Detailed rules were included in the Instructions on how the various tasksshould be performed, and for this area of work, it was required that operativesshould be aged between 16 and 25 years when taken on (Instrucción General,1779, Instruction to be observed in the cigar factory: 32). The RFTS consideredoperators aged forty to be ‘old men’ and, thus, workers were engaged in theirearly twenties.

Control practices were different in the snuff and cigar factories. Whereas theRTFS deployed control by sight in the snuff workshop, cigar workers weresubject to a system of production standards that made direct supervision ofoperators irrelevant.

Disciplinary control of quality

Having explained why the objective of product quality was important to theGeneral Directorate of the Tobacco Agency, the following section describesthe control mechanisms used to implement the Instructions. First, a disciplinarysystem was established for the purposes of monitoring the actions of individualsto ensure that they complied with those speci� ed in the rules; this mechanismwas principally the system of accounting. In this study, we focus on theaccounting indicators that enabled the monitoring of the craft work carried outby cigar workers. In brief this consisted of delivering a standard amount of


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tobacco leaves to cigar workers from which they should manufacture a standardamount of cigars in a standard period of time. In return they would receive astandard pay check.

Through the production standards that were set, the quantities to beproduced in the snuff and cigar factories were determined, the main purposebeing to obtain the maximum ef� ciency in the use of raw materials. Explicit inthis production control system was the obligation of the organization to producein accordance with the product characteristics speci� ed. In effect, the produc-tion standards laid down were the means by which the productive effort of theoperatives could be monitored from a distance, i.e. the workers in Seville couldbe controlled from the Royal Treasury Tobacco Agency in Madrid. Twoexamples, one from each division or product area can be cited, � rst, in respectof snuff production:

On this assumption and given that the tobacco must be well milled, sieved and� ne, each production machine Supervisor (capataz) must be allocated, on adaily basis and from the � rst of April to the end of October, a quantity of 250pounds weight of tobacco leaf, and from the � rst of November until the endof March, a quantity of 220 pounds.(Instrucción General, 1779, Instruction to be observed in the Monte ormilling workshop: 93)

The extracts shown in Figure 2 and Table 2 were used by the ProductionManager to monitor the daily production of milled tobacco and, thus, toascertain the performance of each individual mill in comparison with theestablished rules.

Second, in respect of cigars:

The number of rolled cigars that each operative must deliver duly completedis three for each pound weight of tobacco received, whether Havana or fromthe Island of Santo Domingo. The managers must take full care that themanufacture of the rolled cigars is legitimate and corresponds to the quality ofthe leaf and its circumstances, (i.e. that Havana cigars are actually made fromHavana leaf, for example) . . .(Instrucción General, 1779, Instruction to be observed in the cigar factory:44)

This detailed supervision of the individual worker was completed by a systemof sanctions to penalize those operatives whose productive activities were notcarried out in accordance with the rules set out in the Instructions. Thefollowing reference is an example of the punishment that the Supervisors andtheir assistants in the milling workshops could suffer when production did notmeet the characteristics demanded.

The senior Supervisors will visit very frequently all the machines and stables,observing that the milling process complies with the corresponding methodand good order, that the output from the mortars is correct . . . that thesiftings after being milled are passed through the hand-operated sieves ofcloth before being sieved through those of the trolleys . . . that the sieved


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tobacco is � ne and consistent throughout the whole sack . . . and that any faultor defect they notice in respect of any of these matters will be reported to the

Source: The RTF Archives, Series 3.4.2.1., Legajo, 1381

Figure 2 The organizational structure of the RTFS

Note: This book shows the tabacco milled in each phase (Monte – First Mill – and Repaso –Second Mill) classi� ed by product (e.g. Exquisito snuff) and type of raw material used (e.g.CALS).


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First Production Manager . . . so that the supervisors and their assistants whohave been lax and de� cient are duly punished.(Instrucción General, 1779, Instruction to be observed in the Monte ormilling workshop: 60)

In the cigar factory, unlike in the snuff factory, the sanction system operatedthrough the accounting function. The production standards served to verity inan individualized way that the manufacture of the cigars had complied with therequirements of the Instructions. If the operative was found not to havecomplied with the predetermined speci� cations, the penalty of the loss of a day’swages was imposed.

Table 2 Daily mills work-book: 2 January 1770 (translation of Figure 2)

FIRST MILL San Raimundo 171Exquisite Snuff San Joaqu´õ n 175Type of tobacco leaves:CALS

Santa Ana 181

San Carlos 190 Santa Gertrudis 173Santa Catalina 196 La Brincera 180

386 386 1,592 1,592Type of tobacco leaves:SPLS

American Polvomonte forFine Snuff

San Fernando 207 Type of tobacco leaves: QSanta Rita 210 Buen Suceso 990

417 417 San Emerico 980Type of tobacco leaves:CALM

La Trinidad 1,089

San Antonio Abad 211 3,059 3,059San Sebastian 212 4,651

423 423 SECOND MILLType of tobacco leaves:MTS

Exquisite Snuff

San Remigio 208 Type of tobacco leaves: FSSan Juan Nepomuteno 212 San Francisco 1,836

420 420 Fine Snuff1,646 San Diego 2,279

American Polvomonte forExquisite Snuff

San Juan de Dios 2,254

Type of tobacco leaves:SP

San Vicente Ferrer 2,311

Los Dolores 165 San Agust õ n 2,355Type of tobacco leaves: S 173 9,199Santa Clara 338 338

1,984Fine SnuffBundles of Raw TobaccoSan Franciso de As´õ s 181San Vicente Ferrer 177San Cayetano 167Santo Domingo 187


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. . . this should be done by the method of noting in the lists the number ofpounds weight (of leaf) issued to each operative, against the number of rolledcigars produced, and since the quantity of leaf is always the same for eachoperative, when differences are found in the number of cigars, a most carefulexamination will be made to discover whether the increased output of oneoperative is due to more humidity in the material (than permitted). In suchcases, a deduction will be made from the earnings of the responsible operativeof an amount equal to the cost of making the [defective] cigars.(Instrucción General, 1761: 13.3)

As shown in Figure 3 and Table 3, operators were expected to make 2.7bunches of cigars per pound of tobacco leaves. The Cigar Trusty was responsiblefor control of tobacco production and variation analysis. Table 3 reports positivevariations. Arguably, the long period of training of cigar workers (9 months)before entering proper production might ensure the necessary skills to meetproduction standards.

The accounting system also assumed the function of rewarding the goodproductive behaviour of the operatives. When a worker in the cigar factoryproduced a quantity of cigars greater than that stipulated, but which never-theless conformed to the required characteristics, he was ‘awarded’ the issue ofan extra quantity of raw material the following week, thereby gaining theopportunity to increase his earnings, by working harder, in the future(Instrucción General, 1779, Instruction to be observed in the cigar factory: 44).In this case, the production standards served to value the performance of theoperative in terms of the deviations from the norm. Thus they becametechniques for the measurement of the ef� ciency and, indirectly, of the conductof the operative in the context of the production activity.

The disciplinary system de� ned by the supervision and the mechanisms ofsanction and compensation in the cigar factory also included the compulsorytraining given to new operatives. Placed in the hands of the most productiveworkers, who were to serve as examples to be followed, the aim was to givenew workers a model of exemplary productive behaviour:

. . . it is to be arranged that those who are later to be admitted as operativesin the cigar factory should be placed with those who are most skilled in thiswork so that, in the capacity of masters, they teach [the new recruits] how tomake cigars with the [desired] twisted point . . .(Instrucción General, 1779, Instruction to be observed in the cigar factory:81)

The disciplinary system as a quality control procedure involved inspection asan integral element. This inspection was applied to the raw material, the � nishedproducts and the production machinery. As far as a raw material was concerned,the Finance Minister claimed in 1777 that tobacco leaves received from LaHabana should stress quality at the expense of quantity (RTF Archives, Legajo:194). Therefore, the quality of raw materials was examined upon their receptionat the RTFS by quality specialists known as ‘practicos’. They veri� ed the


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physical condition of the raw material and classi� ed it according to its quality, sothat it should receive the correct treatment in the various stages of theproduction process. For example, the bales of Havana leaf were classi� ed into

Source: The RTF Archives, Series 4.2.1., Legajo, 1557

Figure 3 Variances and salary calculation: Havana and Virginia leaves given by theProduction Manager to each cigar maker, 24 January 1770


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longs, shorts and points, according to their quality, fragrance and maturity(Instrucción General, 1790, Rules for the working of snuff and cigars, by themethod of D. Jose de Losada: 1, 3).

The � nished products were also examined in both factories to make sure thatthey were to the speci� ed standards, particularly in respect of physicalcharacteristics:

The � nished tobacco must be � ne and consistent in all the sacks, and theinspection to ensure this must be performed by the Works Directorsthemselves . . .(Instrucción General, 1779, Instruction to be observed in the Monte ormilling workshop: 102)

Table 3 Variances and salary calculations: Havana and Virginia leaves given by the ProductionManager (translation of Figure 3)

(B)Havanaleaves

Virginialeaves

Totalmaterial

Productsto bemade

Actualproduc-

tionPositivevariance

Negativevariance

Totalvalue

First TeamJophse RivasFrancisco Cadenas 5 15 20 54 64 10Jophse MonteroManuel de Luna 5 15 20 54 63 9Miguel Chamorro 8 20 28 76 94 18Jophse de Castro 8 20 28 76 90 14Diego Gutierrez 5 15 20 54 63 9Jophse Quintanilla 6 18 24 65 75 10Cristoval D õ az 10 20 30 82 90 8Francisco de la Paz 6 18 24 65 72 7Jophse de la Paz 5 15 20 54 60 6Francisco Olmedo 4 10 14 38 40 2Jophse Urave 10 20 30 81 93 12Totals 72 186 258 699 804 105 378

Second TeamFrancisco Velderrama 12 12 24 66 82 16Miguel Trigo 5 15 20 54 61 7Mathias Venavente 6 18 24 65 73 8Manuel Oreda 4 10 14 38 48 10Lorenzo Caro 10 20 30 82 97 15Antonio Caro 10 20 30 82 97 15Francisco Moreno 4 14 18 49 53 4Ignacio Sanchez 10 10 20 55 68 13Antonio Hidalgo 15 15 30 83 102 19Cristoval Gonzalez 12 12 24 66 85 19Antonio Padilla 5 15 20 54 60 6Lorenzo Queros 6 20 26 71 82 11Salvador Hilas 10 20 30 82 96 14Miguel Thumbos 5 15 20 54 64 10Totals 114 216 330 901 1068 167 502


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. . . this countermands the requirement of paragraph 5° of the [earlier]Instruction that charged the Inspector of this factory with the task ofinspecting the rolled cigars at the entry to the warehouse, to see that they aremade according to the foreseen circumstances [i.e. to speci� cation] . . .instead, the meticulous examination of the cigars must be performed by theProduction Manager . . .(Instrucción General, 1779, Instruction to be observed in the cigar factory:14)

Thus from this time, the crucial inspection of output was carried out by theWorks Directors who bore the � nal responsibility for all productive activitiesundertaken in the factories, being the guarantors of the quality of work(Carmona et al., 1994); this demonstrates the importance attached to theinspection procedures by the General Directorate of the Tobacco Agency.Neither should one overlook the importance of the technology used in theproduction process for the purposes of achieving the best possible productquality. For this reason, periodic visits were made to verity that the machineryand tools used were appropriate and in serviceable condition:

It is decreed that the proposed master Supervisors be obliged to continue thepractice, recently established, of accompanying the Inspector of the of� ce ofcloths and the master distributor of these cloths on the monthly visits thatthey must make to all the machines and stables, for the purposes of countingand inspecting in great detail all the cloths, strainers and re� ners present inthese, to verity whether or not they are of the correct class and condition asthose issued, and that this condition corresponds to the class to tobacco beingprocessed (. . .)(Instrucción General, 1779 Instruction to be observed in the Monte or millingworkshop: 44)

Quality in the of� cial Instructions

Although quality was an element of management referred to in all theInstructions from Madrid, the motive for its regulation varied as betweendifferent Instructions. Below we examine these motives in relation to theInstructions of 1744, 1761, 1779 and 1790, highlighting the more signi� cantcharacteristics with respect to quality. As will be shown, the enactment of qualityactions was the outcome of a number of production experiments.

Instrucción General, 1744This was the � rst Instruction of the period of direct control by the Treasury ofthe Tobacco Agency. It puts emphasis on the inspection and classi� cation towhich the tobacco leaf should be submitted on arrival at the factory, a detaileddescription of the activities that must be performed in each stage of theproduction process of snuff, and lastly, a concern for maintaining order andcleanliness in the workshops.


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The interest taken in quality in this Instruction was due basically to the lackof attention paid to it in the RTFS in earlier periods, when the objective was themaximization of production, at times at the clear expense of quality, as can bededuced from some references:

One of the main reasons why tobacco has up to the present time lost much ofits quality and good taste has been the malpractice of putting water and earthin the troughs for three and four days, without concern for what reason andexperience demonstrate; this is that water and earth left for such a length oftime go rotten and cause a disagreeable smell, which de� nitely ruins thetobaccos . . .

(Instrucción General, 1744: 2)

Although staff and workers at all levels were involved in the achievement ofquality in the RTFS, the stage of the Repaso, or � nal mining of the powder,the most important for the quality of the � nal product of snuff, was theresponsibility of the Superintendent himself and the senior managers (Instruc-ción General, 1744: 6). A feature of this Instruction is the fact that there were tobe incentives for the Superintendent to make the production of tobacco fromthis factory to be of the highest quality throughout Europe.

Instrucción General, 1761This Instruction meticulously regulated the quality and the general operation ofthe Factory following its installation in a new building (Gutierrez, 1993). Thefollowing innovations in respect of quality should be noted:

c Concerning the raw material, an exhaustive examination had to be made of thetobacco leaf on receipt by the factory, together with its classi� cation byquality. To make this clear, in the introduction to the Instruction, it isindicated that it will deal with the most reliable means of performing theseinspections of the raw tobacco.

c More detailed rules were laid down than in the previous Instruction,differentiating them by the positions of responsibility. Rules were imposedfrom the Production Manager at the top, considered as having ultimateresponsibility for the quality of the � nished product (Instrucción General,1761: 21, 1), down to the operatives themselves, who were obliged tomanufacture the product in accordance with the pre-determined speci� ca-tions (Instrucción General, 1761: 13, 5), passing through the intermediatemanagers charged with the inspection of the products (Instrucción General,1761: 5, 9).

c The uniformity of production method was emphasized as the requirement forobtaining the correct product quality. For example, the Chief Inspector,charged with the physical control of production in the different stages of theprocess, had to ensure that, every morning, the supervisors of the Repasostage reported to him with samples of the tobacco which was receiving its � nalmining, to be checked against the product processed the previous day, so thatboth days’ output should be the same in respect of juice or liquor content,


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degree of sieving and colour (Instrucción General, 1761: 5, 9). Anotherobjective was that the tools used in the production process should be inperfect condition for use, and that they should be of the correct type for theclass of tobacco that was being processed (Instrucción General, 1761: 7, 9). Inrespect of other quality control procedures, the disciplinary system wasstandardized and the inspection of � nished products acquired greaterimportance.

Instrucción General, 1779The reason why this Instruction dealt with the subject of quality was thedeplorable condition of the factories in 1776, as reported by the specialCommission sent by the Directorate General of the Tobacco Agency to make aninspection of the RTFS. According to this Commission, the stocks of rawtobacco were excessive, but worse, most of the stock was ruined and unusable. Inthe stores were found 21 million pounds weight of the raw material, when theannual production capacity of the Factory was around 2 million pounds. Theresult of this over-stocking was the decay of much of the tobacco stored.The rolled cigars were without fragrance or juice, not tightly rolled, and werefound to be full of defects. Faults were also found in the processing methods(Instrucción General, 1779, Instruction to be observed by the ProductionManagers and their corresponding responsibilities: 6).

From this depressing picture arose the need for a new Instruction to correctthese defects and avoid their repetition in the future. Most of the defectsconcerned quality, which was an especially worrying aspect for the RoyalTreasury. The more notable among the measures proposed were:

c The enforcement of a new method for snuff production. Such methodconsisted of an arti� cial procedure to dry tobacco instead of the formermethod, known as oreo. The new procedure improved both cost and tobaccoquality (Instrucción General, 1779, Instruction to be observed by theProduction Managers and their corresponding responsibilities, 8).

c It was also ruled that the inspection of the � nal product should be carried outby the Production Manager, who had � nal responsibility for productionactivities. Previously, this function had been performed by theSuperintendent.

c Lastly, rules were issued for the functions of new management positionsrelated to quality control, as was the case of the Second Production Manager,appointed to assist the First Production Manager.

Instrucción General, 1790The origin of this Instruction may be explained by:

c Concerns to improve production performance and quality. For example,former procedures of tobacco production revealed odours that could beeliminated by drying tobacco in aired dark rooms. This included a return tothe production method established by Losada in the Instruction of 1761,


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restoring the oreo stage in the processing of the tobacco for powder. In theview of the General Directorate of the Tobacco Agency, this was the mostsuitable of all the methods implemented during the second half of theeighteenth century.

c The great length of the Instruction of 1779 which ‘runs to 1,458 pages, and,although it was divided into individual instructions, these rarely bore anyrelationship to each other. Also, it was very dif� cult to � nd the particularinformation needed’ (NHA, Legajo, 1790).

Analysis and conclusions

The search for the origins of systems of management is and has been a subjectof interest to academics in recent decades. While approached from variousdifferent perspectives, most of the studies published have centred on theIndustrial Revolution in Britain and have had a competitive environment as theirreference, but the results obtained have not been conclusive. For this reason, thepresent study is novel in that it deals with the analysis of a speci� c managementvariable, product quality, in a monopolistic environment, in Spain. Theconceptual foundation of the study is that accounting can serve the purpose ofthe control of individual behaviour, as proposed by Foucault (1992). Hoskin andMacve (1994) have analysed this control from the accounting perspectiveand Carmona et al. (1997) have applied the Foucauldian model to the RTFSduring the period examined by this study.

From the study of the information contained in the of� cial Instructions andthe correspondence maintained between the management of the RTFS and theMinistry of the Treasury in Madrid, it is clear that quality was a very importantfactor in tobacco manufacturing, in spite of the monopoly situation in the sector.The only competition that existed was from contraband supplies, which wereusually of an inferior quality.

Quality was considered to be a primary management objective, as proven bythe Instructions, and high quality was the means of orienting the businesstowards maximizing the income generated by the Tobacco Agency. This explainsnot only the meticulous regulation imposed through the Instructions over allaspects related to quality control, but also explains the system of controldesigned. There was a strong disciplinary control based on the close supervisionof individuals, with the clear purpose of achieving products of high quality. Inthe snuff factory, this supervision was exercised through the detailed regulationof how to perform each of the tasks comprising the separate stages of the pro-duction process. Production standards were also set establishing the quantities oftobacco to be produced at each stage of the process, from a given input of rawmaterial.

Somewhat differently, in the cigar factory, this supervision was exercisedthrough a compensation system based on individual employee performance,requiring an accurate accounting system for its operation. Thus, by means ofproduction standards established, at long distance, by the Directorate General


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of the Revenue, control could be exercised in an individual way over the con-duct of each operative in respect of both the quantity and quality of the � nalproduct. This control of the individual from a distance, effected through theaccounting system, disciplined and guided the behaviour of the operativetowards quality objectives set by the management of the Tobacco Agency.

In concordance with Whitley’s (1999: 521) contentions, different technologiesbring about different control mechanisms. Accordingly, division of labour androutine in the snuff factory made it easy to effect the deployment of managementby sight. In contrast, the craft characteristics of the cigar factory enabled thedeployment of a piece rate salary and management by accounting numbers(Carmona et al., 1997).

Our analysis shows, therefore, that, in the case of the RTFS, the accountingfunction may be explained in terms de� ned by the Foucauldian perspectivewhich puts emphasis on its supervisory and control capacities. It is important toemphasize that this capacity of the accounting system as a procedure for thecontrol and evaluation of human behaviour is determined by the characteristicsof each of the productive activities.

Lastly, it remains to be stated that, in consonance with the philosophy of thosetimes, a strategy for quality control was formulated which involved the punitivecontrol of the individuals whose work determined the level of product quality.Accounting served as an information system and played an important part in thisstrategy. In summary, this case illustrates a concept of quality control in a manu-facturing business extending from the supply of raw material through to consumersatisfaction. As such, the case of the RTFS can be considered an embryonicsystem, a precursor of current systems for the active management of quality.

Acknowledgements

We would like to thank Salvador Carmona for his helpful suggestions in relation to thispaper.

References

Primary sources

National Historical Archive, Madrid, Spain.Instrucción General (1744) (General Regulation, 1744).Instrucción General (1761) (General Regulation, 1761).Suplemento a la Instrucción General de (1761, 1769) (Amendment to the 1761General Regulation, 1769).Instrucción General (1779) (General Regulation, 1779).Instrucción General (1790) (General Regulation, 1790).

The RTF Archives, Seville, Spain.


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accounting and quality control in the royal tobacco factory of seville, 1744-90: an historical...

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