In the 1950s, organized crime became heavily involved in cigarette smuggling, and emissaries from New York City's law enforcement community conveyed their painfully learned lessons to other states in the region. Beefed-up surveillance and interstate communication began in earnest.

New Jersey arrested many bootleggers, some intending to distribute in New Jersey and some just passing through from the tobacco states to New England or Canada. In 1951, for example, Maryland police observed a tractor-trailer truck loading up cases of cigarettes near the Delaware border and radioed up to New Jersey authorities that a suspicious truck might be coming north. New Jersey officers stationed themselves on their side of the new Delaware Memorial Bridge and stopped the truck.[159] The driver had none of the required paperwork for the 483 cases he was carrying, a load then worth $36,000 — about $295,000 in today's dollars.

With more auditing and enforcement, smugglers realized that selling cigarettes in New Jersey with a different state's tax stamp was increasingly dangerous, so the business of counterfeit tax stamps boomed. By 1955, authorities were recognizing that despite increasingly frequent arrests and large seizures, most contraband was getting through, and counterfeiting was one of the reasons. Tilton, still New Jersey's top cigarette tax official and president of the National Tobacco Tax Association, told his NTTA colleagues:

We still have with us ... the problem of smuggling of cigarettes in sizeable quantities across state lines from tax-free to cigarette tax states, which in turn leads to counterfeiting. Perhaps this might be said to be the major problem in evasion presently facing us.[160]

And during that same meeting of the NTTA, the Committee on Tax Evasion emphasized that tax-free states, of which there were seven at the time, were not the only problem.

A tax evasion problem becomes more acute in states that recently have seen cigarette tax rates increased. The [tax] administrator must face not only the possibility of smuggling from non-taxing states but from adjacent states with tax rates that are from one cent to several cents lower.[161]

While smugglers improved their counterfeiting operations, thefts of unstamped and legally stamped, tax-paid cigarettes along the distribution chain became more frequent during the late 1950s. These "leakages" occurred at distributors, on trucks and in retail stores.[162]


[159] "Tax Increases and Price Ceilings," in Proceedings of the 25th Annual Meeting of the National Tobacco Tax Association (Chicago: Federation of Tax Administrators, 1951), 31.

[160] "Presidential Message," in Proceedings of the 29th Annual Meeting of the National Tobacco Tax Association (Chicago: Federation of Tax Administrators, 1955), 4.

[161] "Reports on Standing Committees — Committee on Tax Evasion," in Proceedings of the 29th Annual Meeting of the National Tobacco Tax Association (Chicago: Federation of Tax Administrators, 1955), 5.

[162] "Distributors and Tax Administrators in Partnership," in Proceedings of the 30th Annual Meeting of the National Tobacco Tax Association (Chicago: Federation of Tax Administrators, 1956), 35; and "Consumer Deduction Amendments," in Proceedings of the 31st Annual Meeting of the National Tobacco Tax Association (Chicago: Federation of Tax Administrators, 1957), 20.