Americana: A 400-Year History of American Capitalism by Bhu Srinivasan

Author:Bhu Srinivasan [Srinivasan, Bhu]
Language: eng
Format: azw3, epub
Publisher: Penguin Publishing Group
Published: 2017-09-26T04:00:00+00:00

Twenty-three

BOOTLEGGING

Just as government influence set the trajectory for the development of the radio, federal action set into motion another defining element of 1920s America: Prohibition. It was one of the most improbable political achievements in history. A democratic nation with millions of drinkers who could vote, 300,000 locally operated saloons serving as the hub for workingmen, and the nation’s fifth-largest industry were all powerless to stop a perfect storm of political forces.

The storm had been building from multiple directions for decades. Women found the temperance movement to be a fertile outlet for their rising political voice. Moral crusaders argued that the use of alcohol was destructive to the social fabric and to American productivity. Other factions associated saloons and alcohol consumption with the lowly immigrants who formed the urban base of America. Progressive icons, including William Jennings Bryan, had been vociferous about the need for betterment of society through the absence of alcohol. Business leaders like Henry Ford discouraged its use by their employees. Even the navy had been ordered alcohol free on ships and bases early in Wilson’s administration. The problem, as framed by Prohibition’s advocates, was that America had become a nation of drunkards. The only people in favor of alcohol seemed to be people who liked to drink and the businessmen who had made fortunes serving them.

But since the 1860s, there had been one other constituent that was very interested in the ongoing flow of liquor and beer: the U.S. Treasury. Before the First World War, a full one third of the entire budget of the federal government was financed by taxing beer and spirits. In effect, America had a regressive tax system. Workingmen with a taste for drink spent a greater portion of their incomes on alcohol than did the wealthiest men. And with the government dependent on this base of revenue, the brewers and distillers held the most effective weapon against the risk of federal legislation.

But with the American entry into the war, the weapon lost its potency. The new income tax that was used to finance the war immediately dwarfed the importance of all other sources. Suddenly the couple of hundred million dollars from liquor and beer taxation didn’t seem as significant—the new income tax was delivering revenues in the billions. The ethnicity of the brewers didn’t help either, given that America was now at war with Germany. The most powerful lobbying group in the industry, the United States Brewers’ Association, was so true to its roots that it still conducted much of its internal business in spoken and written German. The Busch family, in control of Budweiser, up to the war held a large annual celebration for the Kaiser’s birthday every year. In addition, the Brewers’ Association was aggressive politically. They financed newspapers and their share of politicians. But the brewers overplayed their hand given the changed circumstances.

In the initial months of the war, a petition representing nearly six million women was presented to the president calling for a temporary ban on beer,

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