Let's assume there are no mistakes or typos in the paragraph. In that case, "it" cannot relate back to "cigarette manufacturing machines" because, as you say, that situation would require the pronoun "they". "It" could relate back to "the cigarette industry" (not the "establishment" of the cigarette industry). There is another possibility. "It" could relate back to the word "development." That is: "It" (the development of the cigarette manufacturing machines) helped produce great numbers of cigarettes . . . . " Unfortunately, it's unclear to me if "It" refers to the cigarette industry of the development of the machines.

Yes I do. The establishment of the cigarette industry reduced the price and helped .....