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Seven lessons of Prohibition

100 years ago today (October 28, 1919), the National Prohibition Act became law. Better known as the Volstead Act, it outlawed the manufacture, transportation, and sale of alcoholic beverages in the United States – Prohibition.

Prohibition failed to end alcohol consumption and was repealed in 1933. In a book on prohibitions, John Meadowcroft of King’s College in London offers several “generic lessons and implications”. The United States’ experience of Prohibition illustrates them all.

Organized interest groups are crucial to the introduction of prohibitions

There was no great clamor for Prohibition. Instead, it was driven by a dedicated coalition containing groups like the Anti-Saloon League and the Women’s Christian Temperance Union.

Illustrating an aspect of what Mancur Olson called ‘The Logic of Collective Action’, the prospective benefits of Prohibition were felt much more strongly by the comparatively small number of Prohibitionists than the prospective costs were by everyone else. As a result, the Prohibitionists were able to wield disproportionate political power.

Prohibitionists had to overcome John Stuart Mill’s ‘harm principle’ – that individual’s actions should only be limited to prevent harm to other individuals. They argued that ‘negative externalities’ – harm that one person’s alcohol consumption did to others – justified Prohibition. Representative Richmond Hobson (D-AL) said that alcohol

…lowers in a fearful way the standard of efficiency of the Nation, reducing enormously the national wealth, entailing startling burdens of taxation, encumbering the public with the care of crime, pauperism, and insanity

There were few social ills for which alcohol wasn’t blamed.

Prohibition criminalizes people who would not otherwise be criminals

Outlawing supply did not remove demand. Instead, law abiding people – unable to understand why having a beer or whisky should be illegal – became criminals overnight.

Eliot Ness, the Prohibition agent who brought down Al Capone, remembered “Doubts raced through my mind as I considered the feasibility of enforcing a law which a majority of honest citizens didn’t seem to want”. In 1931, the National Commission on Law Observance and Enforcement (known as the Wickersham Commission) – established by President Hoover to investigate enforcement of the Prohibition laws – concluded

It is evident that…people of wealth, business men and professional men and their families, and perhaps the higher paid working man and their families are drinking in large numbers in quite frank disregard of the declared policy of the National Prohibition Act

Prohibition places markets into the hands of criminal enterprises

With persistent demand, outlawing supply of alcoholic drinks just put it in the hands of criminals.

Federal authorities estimated that in 1927, Al Capone’s illegal liquor operations were generating about $60 million in total revenue a year – about $873 million today. The Wickersham Commission found that alcohol smuggling was so profitable that only one boat out of five had to land to make a profit.

These profits were worth fighting over. The homicide rate jumped dramatically. In Prohibition’s second year – 1921 – it soared 19 percent to 8.8 homicides per 100,000 people, the highest rate ever recorded at that time. As economist Burton A. Abrams notes,

For the ten years prior to Prohibition, the homicide rate average 6.1 per 100,000 people; for the ten years after the end of Prohibition, it averaged 7.0. During the fourteen years of Prohibition, it averaged 8.4. The homicide rate in Prohibition’s last year, 1933, was 9.7, a rate that the United States would not see again for four decades.

He calculates that Prohibition resulted in an additional 29,000 homicides, roughly equal to American death in the Korean War.

Prohibition increases the risks of already risky activities

By making drinking illegal, Prohibition also made it more dangerous.

People drank more dangerously. Extensive usage – small doses over time – is more likely to be detected than intensive usage – a large dose consumed at once, so the daily nightcap was replaced by the occasional binge.

Producers and consumers switched to more potent drinks. A thousand pints of whiskey sold for more than a thousand pints of beer but was as easy to conceal. Bootleggers were incentivized to produce hard liquor rather than beer and wine. The potency of most alcoholic beverages rose by 50 to 100% compared to either before or after Prohibition. And, as a percentage of total alcohol sales, spending on distilled spirits jumped from about 40% pre-Prohibition to about 90% in 1922, remaining above 70% until repeal.

The product also became more dangerous. Some producers used methyl alcohol. In small quantities, this made watered down liquor taste more potent, but in only slightly larger doses, it could blind, or even kill a consumer. Some moonshiners used automobile radiators which have lead in them to condense the alcohol vapors, leading to lead poisoning. And, with little in the way of branding, consumers were unable to tell a reliable product from a dangerous one.

In early 1930, the Outlook and Independent magazine said

“The Metropolitan Life Insurance Company has published the fact that the alcoholic death rate among their nineteen million policy holders has increased nearly six hundred percent in the last ten years – double what it was in 1918, and approximately the same as in the years preceding. This removes the last doubt from the mind of any reasonable person that the time has come to move for the repeal of the Eighteenth Amendment”

During Prohibition, the death rate from acute alcohol poisoning (due to overdose) was more than thirty times higher than today.

Prohibition diverts law enforcement resources away from conduct that harms third parties

A law which few people agree with requires massive enforcement if it is to succeed.

The number of Prohibition agents roughly doubled between 1920 and 1930. By 1930, prosecutions in federal courts under the Prohibition Act were eight times the total number of all federal prosecutions in 1914. Between 1914 and 1930, the number of federal convicts rose from 4,000 to about 12,500, with over half that growth due to breaches of the Prohibition Act. Federal spending on prisons increased 1,000 percent between 1915 and 1932. So overwhelmed were the courts that in 1930 nearly 90% of Prohibition convictions took the form of deals with defendants pleading guilty to minor offences with light penalties. In cities, only about 5% of convictions resulted in some form of imprisonment.

These were resources dedicated to stopping producers and consumers transacting voluntarily. They were not available for the

And it wasn’t enough. In 1925, 280 federal agents were assigned to prevent smuggling across the United States’ 3,700 miles of land borders. The Wickersham Commission noted that to effectively prevent smuggling across these borders would require five or six times that many agents. A top federal enforcement official estimated that in 1925 only about 5% of all smuggled liquor was intercepted.

Prohibition almost never works and is almost always counterproductive

Despite the effort, Prohibition failed to end alcohol consumption.

The economist Clark Warburton estimated that, by 1925, alcohol consumption was about 65% of pre-Prohibition rates and just over 70% by 1929. Deaths per 1,000 from alcoholism, while remaining below the 1911 level of 0.040, climbed from 0.006 in 1920 to 0.034 in 1929.

Not only had Prohibition failed, but it caused and exacerbated an array of social problems, generating exactly the sort of ‘negative externalities’ which had commended it in the first place. Nationally, 73% of voters favored repeal. By the 21st Amendment, the 18th Amendment became the only one to be repealed. The Noble Experiment was over.

John Phelan is a economist at the Center of the American Experiment. 

To read more about Prohibition in Minnesota specifically and get an answer to the deeper question of why Prohibition failed, check out the latest issue of Thinking Minnesota.

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