Ernest Hare

The Prohibition Era & its Effects

  • Prohibition, also known as the Prohibition Era, was a period of time in American history where the manufacturing, transportation, and sale of alcohol were prohibited. The era lasted from 1920 to 1933 and was enacted through the 18th Amendment to the U.S. Constitution, which was ratified in 1919. The goal of prohibition was to reduce crime, improve public health, and increase social and moral standards. However, the Prohibition Era had many unintended consequences and ultimately proved to be a failure.

The 18th Amendment, ratified on January 29, 1919, took effect a year later, while 33 states had already implemented their own prohibition laws. In October 1919, Congress approved the National Prohibition Act, commonly known as the Volstead Act, which established guidelines for enforcing Prohibition at the federal level. Representative Andrew Volstead of Mississippi, the chairperson of the House Judiciary Committee, championed this legislation.

Both the federal and local governments faced difficulties in enforcing Prohibition throughout the 1920s. Initially, the responsibility for enforcement was assigned to the Internal Revenue Service (IRS), but it was later transferred to the Justice Department. Enforcement efforts varied significantly depending on the region, with stricter enforcement in areas where the population was supportive of Prohibition, such as rural areas and small towns, and more lenient enforcement in urban areas.

Although there were early signs of success, such as a decline in arrests for drunkenness and a reported 30 percent decrease in alcohol consumption, individuals determined to continue drinking devised increasingly inventive methods to evade the law. Illicit production and sale of alcohol, known as “bootlegging,” persisted throughout the decade. “Speakeasies,” establishments that sold alcohol illicitly, operated openly. Additionally, people engaged in smuggling alcohol across state lines, and individuals produced homemade liquor, commonly referred to as “moonshine” or “bathtub gin,” in their private residences.

Furthermore, Prohibition provided fertile ground for the emergence of criminal activities associated with bootlegging. Notably, Chicago gangster Al Capone became infamous during this era, amassing an astonishing annual income of $60 million from bootlegging operations and speakeasies. The rise of illegal activities in this context led to a corresponding increase in gang violence. The most notorious incident was the St. Valentine’s Day Massacre in Chicago in 1929, where a group of men dressed as policemen, believed to be associated with Capone, shot and killed members of a rival gang.


Near Death of the Brewing Industry
|In 1916, the United States boasted a thriving beer industry with 1,300 breweries producing full-strength beer. However, a decade later, this industry had completely vanished. The number of distilleries also experienced an 85% reduction, with most of the remaining establishments focusing on the production of industrial alcohol. The legal production of near beer, a low-alcohol alternative, required significantly less malt, rice, hops, and corn compared to full-strength beer prior to National Prohibition. Similarly, the wine industry saw a drastic decline, as the 318 wineries in 1914 dwindled down to a mere 27 in 1925. The number of liquor wholesalers decreased by 96%, and legal retailers faced a reduction of 90%. Consequently, federal tax revenues from distilled spirits plummeted from $365 million to less than $13 million between 1919 and 1929, while revenue from fermented liquors nearly vanished.

In response to the changing landscape, the Coors Brewing Company shifted its focus to producing near beer, porcelain products, and malted milk. Miller and Anheuser-Busch pursued similar diversification strategies. Nonetheless, the majority of breweries, wineries, and distilleries were forced to permanently close. Historically, the federal government has played a vital role in fostering the growth of new industries, such as chemicals and aerospace. However, it is rare for the government to take decisive action to shut down an industry. The closure of numerous large-scale commercial operations resulted in liquor production, if it were to continue, becoming the purview of small-scale domestic producers—an unexpected reversal of the typical course of industrialization.

This industrial and economic devastation was unforeseen prior to the enactment of the Volstead Act, which followed the adoption of the Eighteenth Amendment. The amendment prohibited the manufacture, transportation, sale, importation, and exportation of beverages considered “intoxicating” without clearly defining the term. The Volstead Act provided a definition of “intoxicating” as beverages containing 0.5% or more alcohol by volume, effectively outlawing almost all alcoholic drinks. The brewing industry, expecting moderate-strength beer to remain legal, was taken aback by this development, and their attempts to challenge the definition proved unsuccessful. The act also prohibited the possession of intoxicating beverages, but it included a significant exemption for private dwellings, allowing the owner, their family, and guests to keep such beverages for personal use. Additionally, sacramental wine and medicinal liquor were permitted alongside private consumption.


Did Prohibition Make America Healthier?
One area where prohibitionists claim to have supporting evidence is the decrease in “alcohol-related deaths” during Prohibition. However, upon closer examination, this apparent success turns out to be an illusion. Contrary to expectations, Prohibition did not improve health and hygiene in America. While it is true that cirrhosis of the liver poses a significant health risk, especially for women consuming more than four drinks per day, it accounts for only a small fraction of total annual deaths. Additionally, alcohol can only be considered a contributing factor to most of these deaths. It’s important to note that many non-drinkers also develop cirrhosis, and the majority of heavy drinkers do not develop this condition. In fact, a report by Dr. Snell of the Mayo Clinic in 1931 stated that only 4 percent of alcoholic individuals experience cirrhosis.

Even in the worst year prior to Prohibition, deaths caused by alcoholism and cirrhosis of the liver accounted for less than 1.5 percent of total deaths. When examining death rates, a significant decrease in alcoholism and cirrhosis-related deaths can be observed, but this drop occurred during World War I, before Prohibition was enforced. The rate of alcoholism-related deaths reached its lowest point just before Prohibition was implemented and then returned to pre-World War I levels. This could be attributed to increased consumption during Prohibition and the consumption of more potent and dangerous alcoholic beverages.

Denmark, Ireland, and Great Britain also experienced a substantial decline in death rates from alcoholism and cirrhosis during World War I, even without prohibition. In fact, these rates continued to decline throughout the 1920s in those countries, while in the United States, rates either increased or remained stable, despite Prohibition.

Prohibitionists like Irving Fisher argued that focusing on the benefits of Prohibition for the young meant disregarding the older alcoholic generations, hoping they would eventually die out. However, if this were the case, one would expect the average age of people dying from alcoholism and cirrhosis to increase. Surprisingly, the average age of individuals dying from alcoholism actually decreased by six months between 1916 and 1923, a period when the overall health of young people was improving. These findings suggest that there were no significant health benefits resulting from Prohibition. On the contrary, it has long been established that consuming a moderate amount of alcohol is harmless and may even have health benefits. As early as 1927, studies cited by Clarence Darrow and Victor Yarros demonstrated that moderate drinking does not shorten life or have a serious impact on health. In general, it was believed to be beneficial. Even the respected Harvard psychologist Hugo Månsterberg stated that there is no scientifically sound evidence demonstrating harmful effects from the temperate use of alcohol by normal adult men.


The Economic Effects of Prohibition
Prohibition in the United States, had significant economic effects on various sectors and aspects of the economy. While its main goal was to reduce social problems associated with alcohol consumption, Prohibition had unintended consequences that affected businesses, jobs, tax revenues, and the overall economy. the economic effects of Prohibition on different sectors, including agriculture, manufacturing, hospitality, organized crime, and government revenue.

Agriculture Sector:
One of the sectors most heavily impacted by Prohibition was agriculture. Prior to Prohibition, a substantial portion of American farmland was dedicated to growing crops for the production of alcoholic beverages. With the sudden ban on alcohol, demand for these crops plummeted. Farmers who relied on the sale of barley, hops, and grapes suffered significant losses as their markets disappeared. Many vineyards and breweries went out of business, leading to a decline in agricultural employment and a decrease in income for farmers.

Manufacturing Sector:
Prohibition had a detrimental effect on the manufacturing sector, particularly on industries directly linked to alcohol production. Breweries, distilleries, and wineries were forced to shut down, resulting in massive job losses. It is estimated that around 300,000 people directly employed by the alcohol industry lost their jobs. Additionally, manufacturers of glassware, bottles, labels, and other alcohol-related products also experienced a decline in demand, leading to further job cuts.

Hospitality Sector:
The hospitality sector, including bars, taverns, and restaurants, suffered greatly under Prohibition. These establishments relied heavily on the sale of alcoholic beverages, and with their main source of revenue eliminated, many were forced to close their doors permanently. The closure of these businesses resulted in massive job losses within the industry, affecting bartenders, waitstaff, and other service personnel. Moreover, the decline in the hospitality sector had a negative ripple effect on other industries, such as food suppliers, entertainment venues, and transportation services.

Organized Crime:
One of the most notorious consequences of Prohibition was the rise of organized crime. The illegal production, distribution, and sale of alcohol became a profitable venture for criminal organizations. Bootlegging, the illegal transportation and sale of alcohol, thrived during this period. Organized crime syndicates, such as those led by Al Capone, profited immensely from this underground economy. The illicit alcohol trade not only undermined the rule of law but also created violence and corruption. The rise of organized crime had a significant economic impact as it diverted resources away from legal industries and eroded public trust in institutions.

Government Revenue:
Prohibition had a substantial impact on government revenue. Prior to the ban, alcohol sales and related activities generated a significant amount of tax revenue for federal, state, and local governments. With the elimination of legal alcohol sales, tax revenues plummeted. The government not only lost tax revenue from alcohol sales but also incurred significant costs in enforcing Prohibition. Law enforcement agencies had to allocate resources to combat bootlegging and other alcohol-related illegal activities. The costs of enforcing Prohibition outweighed the benefits, further straining government budgets during a time of economic hardship.

Prohibition had far-reaching economic effects on various sectors and aspects of the economy. The ban on alcohol production and sales led to the decline of industries such as agriculture, manufacturing, and hospitality, resulting in massive job losses and decreased income. The rise of organized crime and the underground alcohol market further destabilized the economy and eroded public trust. Moreover, the government faced a significant loss of tax revenue while incurring substantial costs associated with enforcing Prohibition. Ultimately, the unintended economic consequences of Prohibition highlight the importance of carefully considering the potential effects of policy decisions on the economy as a whole.


Lessons Learned
Prohibition was initially greeted with enthusiasm by many Americans, who saw it as a way to improve society and reduce crime. However, the unintended consequences of prohibition soon became apparent. One of the biggest problems was the rise of organized crime, as bootleggers and smugglers took advantage of the new law to profit from the illegal sale of alcohol. Gangsters like Al Capone became infamous for their involvement in the illegal liquor trade, and violence and corruption became rampant in many cities.

Another unintended consequence of prohibition was the rise of speakeasies, illegal bars that served alcohol to patrons in secret. Speakeasies became popular in cities across the country, and their existence further fueled organized crime and corruption. Many people who had previously been law-abiding citizens began to flout the law, leading to a breakdown of respect for authority and the rule of law. Prohibition also had a significant impact on the economy. The loss of tax revenue from the sale of alcohol was a major blow to the federal government, which had come to rely on alcohol taxes to fund many of its programs. The ban on alcohol also had a negative impact on many industries, such as brewing and distilling, and led to a significant loss of jobs.

In addition to these problems, prohibition also had a significant impact on public health. The illegal production and sale of alcohol meant that there was no regulation of the quality or safety of the alcohol being consumed. Many people became sick or died from drinking tainted alcohol, which was often made in unsafe and unsanitary conditions. The ban on alcohol also led to a rise in the consumption of other drugs, such as marijuana and cocaine, which were not included in the prohibition. One of the most important lessons learned from prohibition is the danger of attempting to legislate morality. Prohibition was based on the belief that alcohol was a moral evil and that banning it would lead to a more virtuous society. However, this belief was not shared by everyone, and many people resented the government’s attempts to control their behavior. The failure of prohibition demonstrated that attempting to legislate morality is often ineffective and can lead to unintended consequences.

Another lesson learned from prohibition is the importance of considering the economic impacts of public policy. Prohibition had a significant impact on many industries, such as brewing and distilling, and led to a significant loss of jobs. The loss of tax revenue from the sale of alcohol was also a major blow to the federal government. This experience showed the importance of carefully considering the economic impacts of public policy and the potential unintended consequences of government action. Finally, the failure of prohibition demonstrated the importance of civil liberties and the rule of law. The ban on alcohol led to a breakdown of respect for authority and the rule of law, as many people began to flout the law and engage in criminal behavior. This experience underscored the importance of protecting civil liberties and the rule of law, even in the face of social problems or moral issues.

Overall prohibition was a well-intentioned but ultimately flawed policy that had many unintended consequences. Its failure demonstrated the danger of attempting to legislate morality and the importance of carefully considering the economic impacts of public policy. It also highlighted the importance of protecting civil liberties and the rule of law. The lessons learned from prohibition continue to shape American policy and politics, and the Prohibition Era remains an important chapter in American history.