Tuesday, March 22, 2011

prohibition allegedly ended

March 22, 1933: Prohibition Ends

2011-03-22 09:40:49

On this day in 1933, President Franklin D. Roosevelt signs the Beer and Wine Revenue Act. This law levies a federal tax on all alcoholic beverages to raise revenue for the federal government and gives individual states the option to further regulate the sale and distribution of beer and wine.
With the passage of the 18th Amendment and the Volstead Act in 1919, temperance advocates in the U.S. finally achieved their long sought-after goal of prohibiting the sale of alcohol or "spirits." Together, the new laws prohibited the manufacture, sale or transportation of liquor and ushered in the era known as "Prohibition," defining an alcoholic beverage as anything containing over 0.5 percent alcohol by volume. President Woodrow Wilson had unsuccessfully tried to veto the Volstead Act, which set harsh punishments for violating the 18th Amendment and endowed the Internal Revenue Service with unprecedented regulatory and enforcement powers. In the end, Prohibition proved difficult and expensive to enforce and actually increased illegal trafficking without cutting down on consumption. In one of his first addresses to Congress as president, FDR announced his intention to modify the Volstead Act with the Beer and Wine Revenue Act.
No fan of temperance himself, FDR had developed a taste for alcohol when he attended New York cocktail parties as a budding politician. (While president, FDR refused to fire his favorite personal valet for repeated drunkenness on the job.) FDR considered the new law "of the highest importance" for its potential to generate much-needed federal funds and included it in a sweeping set of New Deal policies designed to vault the U.S. economy out of the Great Depression.
The Beer and Wine Revenue act was followed, in December 1933, by the passage of the 21st Amendment, which officially ended Prohibition.
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The War Prohibition Act

Attempts to control consumption of alcohol in America have been with us since before the formation of the United States. In 1697, the Colony of New York passed its first blue laws that closed saloons on Sundays. Many colonies, states, counties and towns followed suit over the decades. Similar “dry” Sundays still exist across the U.S.

The village of Oberlin was created in 1836 on a 500-acre tract of virgin forest located 34 miles southwest of Cleveland, Ohio. A couple of years before, abolitionist Congregational Christians founded the Oberlin Collegiate Institute (today known as Oberlin College). It was the first coed university in America, the first to admit blacks as equals to whites, and it was a station for the Underground Railroad during the Civil War. Some claim the Civil War started in Oberlin. Oberlin has long been associated with progressive causes. However, the progressive new village and college both banned alcohol. They chose their liberties.

In May of 1893, the Reverend Howard Russell, an Oberlin alumnus, visited the campus. He was on a mission. An alcoholic brother had turned him against liquor, and since leaving Oberlin Reverend Russell had been associated with the Temperance Alliance. His sermons resulted in the closing of several saloons throughout the region. Upon his visit to Oberlin, he convinced the citizens to create the Ohio Anti-Saloon League. He was made superintendent. Temperance circles around the country soon cropped up, and in 1895 the Anti-Saloon League of America was created.

By 1913, the league lobbied and helped elect “dry” candidates to offices. Subsequently, several members of the league, including the Reverends Purley Baker, James Cannon, Jr.  and Wayne Bidwell Wheeler drafted a proposed 18th Amendment to the Constitution. It basically stated that, “…Sale, manufacture for sale, transportation for sale, importation for sale and exportation for sale, of intoxicating liquors for beverage purposes in the United States and all territory subject to the jurisdiction thereof are forever prohibited.”

Two dry Democratic legislators, Senator Morris Sheppard of Texas and Congressman Richmond Pearson Hobson of Alabama took the draft and submitted it to the appropriate committees of both congressional chambers. Congress debated alcohol sale and consumption, but took no action at that time. Meanwhile, President Woodrow Wilson had voiced his opposition to the amendment. Wilson was pro-temperance but against the constitutional amendment. As he said: “There is no temperance in it.”

The dries picked up more seats in both congressional houses in the 1914 elections. Still, nothing took place on the Hobson-Sheppard resolution until 1917.

On April 16, 1917, Woodrow Wilson asked Congress to declare war on Germany.  A vital part of Wilson’s plan was a food control bill designed to direct vital food materials to aid in the war effort. The league members saw an opportunity. Because hard liquor production required grain, sugar and other items, they used strong patriotic arguments against liquor. They also found some dry military officers to speak about keeping soldiers free from liquor and maintaining their sound minds.

They also went after the beer industry as being pro-German and treasonable. Most brewers had German names, and they were easy targets. (Post 9/11 French criticism of the Iraq invasion resulted in a similar reaction by some members of the U.S. Congress: The cafeteria at the U.S. House of Representatives changed its menu and offered “Freedom Fries” and "Freedom Toast".) Similarly, the league and its backers renamed sauerkraut as “Liberty Cabbage”. After much wrangling, a food bill passed on Sept. 17, 1917. It banned hard liquor but did not touch beer or wine.

Meanwhile, Wayne Bidwell Wheeler went back to the original 18th Amendment draft, modified the language to satisfy the states’ rights people, and gave it back to his friends in Congress. By Dec. 18, 1917, the 18th Amendment to the Constitution had passed both houses of Congress. Ironically, the final version of the 18th Amendment (now called The War Prohibition Act) was passed 10 days after the armistice ending WW 1.

The amendment then went to the states for ratification. It became law on Jan. 16, 1919, two months after WW 1 hostilities stopped. The league’s main argument for passage had been wartime urgency.

AMENDMENT XVIII Passed by Congress Dec. 18, 1917. Ratified Jan. 16, 1919.

Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.
Section 2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.
Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

The Anti-saloon League and temperance movement's long quest was seemingly brought to a triumphant conclusion. But other little-noticed elements were at play.

Prohibition and the Gas Pump
In the late 19th-century, alcohol production from spirits distillation was up to 25 million gallons a year. In 1906 President Teddy Roosevelt sponsored legislation to remove industrial alcohol from taxation. Farmers now had a chance to create a useful product. In that line, some of Henry Ford’s Model A’s and all Model T’s were designed to run on either ethyl alcohol or gasoline. One had to simply flip a switch near the dashboard. Ford hoped to make his autos and tractors affordable to the rural landowner.

At the same time, John D. Rockefeller was, among other things, selling kerosene. Kerosene was distilled from oil and used in boilers and for lighting. The byproducts from these distillations were added to the nearby rivers. Rockefeller and others soon found these distillation byproducts had a use. They worked well in internal combustion engines. It was called gasoline and was sold very cheaply. The oil companies were pleased and with their backing gasoline became the primary fuel used in American cities.

So, by 1906, because of cheapness of gasoline, alcohol production was down to 10 million gallons per year. Still, in rural areas, alcohol was the main fuel used. People on Sunday drives could stop at almost any farm and fill up their cars with alcohol.

Jumping up to 1921, gasoline prices were very high. The gas prices were high as a result of the oil companies controlling the supply. Compounding the picture, the largest distilleries in American had been taken over by major oil companies and associates. Rockefeller funded Prohibition initiatives. The distilleries generally did not complain. Actually, many brewers sent letter to Ford asking him to buy the distilleries. They saw their bleak future.

It appears that Ford saw the power of Rockefeller. Ford was a teetotaler, but felt a constitutional amendment was wrong. He also thought alcohol was better than gasoline for cars and tractors. As far back as 1916, when the forces of Prohibition were gaining strength, Ford showed his thoughts by stating that Midwestern breweries should not be shutdown, but converted to distilleries to distill the beer into denatured alcohol for use in his internal combustion engines.

So, it was not just the temperance and war benefits that helped Prohibition come into being, the oil companies and John D. Rockefeller had a desire to remove the competition. And they had lots of money.

The Federal Income Tax amendment was passed in 1913, and its revenue raising ability was quickly realized. Revenues in 1917 were nearly three times those of 1916. Congress amended the income tax in October of 1917, and revenues increased substantially in 1918. This revenue legislation passed just two months prior to the initial proposal of the 18th Amendment. Prior to the income tax amendment, tariffs and alcohol taxes provided the bulk of federal government revenues. Between 1870 and 1920, customs and liquor taxes provided nearly 80% of all federal revenue.

With the 18th Amendment, lost federal alcohol tax revenues were more than recovered by income taxes. The income tax supplied two-thirds of federal revenue by 1918, and by 1920 income taxes dominated customs and liquor taxes by a ratio of 9 to 1. The massive increase in income taxes removed Congress's need for alcohol tax revenues and created the opportunity for the passage of the 18th Amendment. Some feel that the income tax tipped the balance in politicians' cost-benefit calculations in favor of voting dry by lowering the cost of voting for Prohibition.

Now a method of enforcement had to be enacted. At the Anti-Saloon League, Wayne Wheeler drafted a National Prohibition Act. He gave it to Representative Joseph Volstead of Minnesota. Volstead introduced it to the House. Even though the Congressman had nothing to do with authorship, it became known as the Volstead Act. In actual fact, Volstead never had delivered a temperance speech nor signed a temperance pledge. It was said he took an occasional nip and was quoted as saying “I don’t know that there’s harm in one drink.” He opposed a few prohibitionist candidates in his six elections to the House. But, he was chairman of the House Judiciary Committee, and Wheeler’s final draft fell into his lap.

Several sections of the Volstead Act were modified before Congress passed the final act. Among those trying to get the language in the act changed was Paul Garrett. He lived in Brooklyn, N.Y., but also owned vineyards in California. He managed to secure a hearing before Congress to speak on behalf of the grapegrowers. He, along with other growers, presented their case. At the hearing was the Reverend E.C. Dinwiddie, the legislative superintendent of the Anti-Saloon League. Since the league authored both the 18th Amendment and the Volstead Act, the Reverend was center stage at these congressional hearings. 

Dinwiddie repeatedly assured the grapegrowers that the league was concerned about the welfare of grapegrowers and had no desire to cause them hardship or losses. He suggested the league would aid growers in marketing their harvests. He even suggested that de-alcoholized wines could be made and sold, thus giving the growers a steady market. It was pointed out that before de-alcoholization could occur, alcohol had to be produced via fermentation. So Dinwiddie was entertaining the idea of wine being produced for ultimate de-alcoholization to less than .5%.

Garrett later met with Dinwiddie and Wheeler at the league office to discuss the act. The league wrote a new clause into the act allowing wine to be produced for medicinal, sacramental and de-alcoholization purposes. Also discussed was the right of individuals to make wine in their home for personal use. Nobody believed this small gesture would in any way benefit the grapegrowers, so nobody ever considered it to be significant. Everyone concerned thought that this would involve a very small amount of grapes. Also, nobody wanted to offend housewives by denying them the right to make a few jars of fruit wine from their own or wild grapes or berries.

The result of the wishes to look out for grapegrowers and home winemakers (especially the housewives) was the addition of Section 29, Title II to the Volstead Act: “…The penalties provided in this chapter against the manufacture of liquor without a permit shall not apply to a person manufacturing nonintoxicating cider and wine exclusively for use in his home, but such cider and wine shall not be sold or delivered except to persons having a permit to manufacture vinegar.”

The original version had wine in it. Some very dry members of Congress objected. Wine was replaced by “fruit juices.” Even though nonintoxicating fruit juice seemed to have no resemblance to wine, the league assured Garrett and the growers that they were prepared to disregard the Volstead’s definition of “intoxicating” and to accept wine made at home as “nonintoxicating in fact.”

The Volstead Act, officially titled the "National Prohibition Act," was passed on Oct. 18, 1919 and went into effect Feb. 1, 1920. It effectively outlawed the production and sale of alcoholic beverages. It started with:

TITLE I. TO PROVIDE FOR THE ENFORCEMENT OF WAR PROHIBITION.
The term "War Prohibition Act" used in this Act shall mean the provisions of any Act or Acts prohibiting the sale and manufacture of intoxicating liquors until the conclusion of the present war and thereafter until the termination of demobilization, the date of which shall be determined and proclaimed by the President of the United States. The words "beer, wine, or other intoxicating malt or vinous liquors" in the War Prohibition Act shall be hereafter construed to mean any such beverages which contain one-half of 1 per centum or more of alcoholic beverages by volume.


After the bill passed Congress, Garrett met with the league principals again and was reassured the word “nonintoxicating” would not apply to home winemakers. This was not clear to Garrett. It was still up to the Treasury Department to get involved, since Congress had fixed no limit on the amount of “nonintoxicating” fruit juice or cider that could be made tax-free by individuals. The bureau’s interpretation stated that “…any person may without permit…manufacture non-intoxicating cider and fruit juices…and…must be used exclusively at home, and when so used the phrase ‘non-intoxicating’ means non-intoxicating in fact and not necessarily less than one-half of one per cent of alcohol as provided in Section 1 of Title II of said act.”

So, how much “non-intoxicating cider and fruit juices” could an individual make? That has always been decided by the Internal Revenue Service. Presently, CFR Title 27, Part 1, Alcohol, Tobacco and Firearms states in § 24.75, Wine for personal or family use: (a) General. Any adult may, without payment of tax, produce wine for personal or family use and not for sale. (b) Quantity. The aggregate amount of wine that may be produced exempt from tax with respect to any household may not exceed: (1) 200 gallons per calendar year for a household in which two or more adults reside, or (2) 100 gallons per calendar year if there is only one adult residing in this household.

During Prohibition there was REGULATIONS 60 RELATIVE TO INTOXICATING LIQUOR, Revised March 1924. Article VI. Manufacture of cider, vinegar and nonintoxicating fruit juices. Section 615 stated in print: “Under the internal revenue laws persons producing fruit juice, other than cider, containing one-half of 1 percent or more of alcohol by volume, are required to establish bonded premises and pay wine tax on the quantity removed from such premises, unless they come within the 200-gallon tax-free exemption provided in section 616 of the internal revenue act of 1918.”

Apparently the family wine tax exemption dates from 1916. So, since 1916 the Internal Revenue Service has allowed that a head of household, and spouse, could make 200-gallons of fruit juice or wine a year.

The conflicting definitions of “intoxicating” of the Volstead Act were left unchallenged until Maryland Congressman John Philip Hill tried to get the Bureau of Prohibition to clarify Section 29. In 1923, Hill made wine at his Baltimore home. He invited the bureau to his house and gave them a sample. After analysis, the bureau secured a temporary injunction against Hill and padlocked his wine cellar.

In 1924 Hill made cider. Again, he invited everyone to his house to taste his homemade cider. People from the Anti-Saloon League and Bureau of Prohibition were also invited. None came. However, this time, Hill was indicted, not arrested, for violation of the Volstead Act for illegally manufacturing wine and cider. 

The case went to the District Court in Baltimore. The judge held that Hill was entitled to show evidence that his cider was not intoxicating “in fact”; i.e., that the definition of intoxicating in the Volstead Act did not apply to home production of alcoholic beverages. The jury ruled that Hill’s cider did not, in fact, intoxicate. Until Hill forced the ruling, home winemaking was taking place with uncertainty regarding the Volstead Act. After the Hill case, producing cider and wine at home was considered to be legal by all, as long as the result was “nonintoxicating in fact”. Since no one knew precisely what “nonintoxicating in fact” was, the Bureau of Prohibition left home winemakers alone.

A parallel case before the Circuit Court of Appeals on Oct. 20, 1925 was Isner vs. United States, which overturned a previous ruling by the U.S. District Court. Creed Isner had been convicted of manufacturing intoxicating liquor. The District Court ruled that Isner be indicted and convicted for unlawfully possessing "intoxicating liquor, to wit, 70 gallons of grape wine." The main facts showed that Isner had a quantity of wild cherries and elderberries, and had made an effort to get a permit from the state authorities to make wine out of them. The berries were grown on his own farm. He put them into a barrel and strained out the berries, having added about two gallons of water to one gallon of juice.

Having failed to secure a permit, he placed the barrel containing the juice and water in an outside cellar, where state police officers found it. The contents of the barrels were not destroyed by the officers, but pint samples were taken from the barrels. There was much disputed testimony as to whether or not this concoction was fit for beverage purposes. A number of witnesses said it “was so bitter that it could not be drunk,” and others said that it tasted like wine. The pint samples were analyzed, but the record does not show the alcoholic content. Isner offered to show that the liquid was not intoxicating, but objection to this evidence was sustained by the District Court judge.

The final clause of Section 29 of the Volstead Act reads: “The penalties provided in this chapter against the manufacture of liquor without a permit shall not apply to a person manufacturing nonintoxicating cider and fruit juices exclusively for use in his home, but such cider and fruit juices shall not be sold or delivered except to persons having a permit to manufacture vinegar.”

According to the Court of Appeals, this provision meant that Creed Isner could not be convicted of violating the Volstead Act unless the government showed that his watered-down cherry and elderberry juice mixture was in fact intoxicating. The government chose not to do so, stipulating that Isner’s wine was not intoxicating. It argued that “this concoction or beverage, although not intoxicating, comes under the general prohibition in the act defining liquor,” i.e., “such beverages which contain one-half of 1 per centum or more of alcohol by volume.” In his brief, the U.S. attorney wrote, "In order that the question may be settled squarely on the construction of the last clause of Section 29 (of the Volstead Act), the government concedes here and now that the said wine was not, as a matter of fact, intoxicating."

The Appeals Court concluded that the last clause of Section 29 made an exception to this general definition, such that the “grandmother and housewife” would not be "penalized and made criminals if they made blackberry cordials or blackberry wines for use in their own home.” The exception was pragmatic but illogical since it rested on the premise that homemade “cordials or wines” could be alcoholic enough to warrant the trouble without being “intoxicating.”

What happened to the grapegrowers during Prohibition? Did the housewives make very many jars of wine? From 1925 to 1929, Americans drank more than 678 million gallons of homemade wine. That was three times as much as all the domestic and imported wine they drank during the five years before Prohibition.

Bearing vineyard acreage in California in 1920 was about 300,000 acres; by 1927, it hit 577,000 acres. Grapes harvested went from 1.25 million tons in 1920 to 2.5 million tons in 1927. That’s a lot of jars of wine.

A major problem also arose. The 18th Amendment passed Congress in 1917 and was ratified by the states in 1919, and the Volstead Act passed shortly thereafter. Meanwhile, WW 1 ended in 1918 and thousands of veterans were returning home. Most of these vets had been stationed in France. They had become accustomed to having a glass of wine with their meals. They won a war, returned to their homeland and were told they couldn’t buy a bottle of wine. They were a bit bitter. The vets were not on the sides of the “dries”.

Besides home winemaking, there were other clever ways of manufacturing and even selling “non-intoxicating” cider and fruit juices. In Manhattan, a salesgirl gave a demonstration about a new beverage. On a counter before her were displayed solid bricks of grape concentrate. She took an empty gallon jug and told her audience that all they had to do was put a pre-measured brick in a gallon jug, add water almost to the top, swirl it around, and, violá, you have grape juice. 

She cautioned that the juice “has to be used immediately”.

She added that:

“The buyer should not put the water in the jug and mix the concentrate and then put the jug away in the cupboard for 21 days. It might, then, turn into wine.

“Do not put the cork and patented red rubber siphon hose in the top of the bottle. (These she sold as accessories along with the gallon jugs.) That is only necessary if fermentation is taking place.

“Do not put the end of the siphon hose in a glass of water. That is only needed to ensure that fermenting wine is sound and drinkable.

“Do not shake the bottle once a day. That would excite yeast in a fermenting wine.”

By day’s end, she usually sold hundreds of blocks of Port, Sherry, Burgundy and Rhine concentrate, jugs and accessories. If her warnings were ignored, the bricks would produce 13% alcohol wine.

The problems faced by the United States during Prohibition are well known. With the Crash of 1929 and start of the economic depression, the dries were losing allies. Both Hoover and Roosevelt pledged repeal of the 18th Amendment. A month after Roosevelt’s landslide victory, Republican Senator John Blaine of Wisconsin drafted a resolution calling for the repeal of the 18th Amendment. Congress passed the resolution and it was sent to the states. With ratification of the 21st Amendment on Dec. 5, 1933, the 18th Amendment was repealed. The conclusive proof of Prohibition’s failure is, of course, the fact that the 18th Amendment became the only constitutional amendment to be repealed.

During the Depression, the populations of the big cities of America increased, partly because people came to the cities looking for work. As a result, the cities experienced increased expenditures due to public support needs. There were also leftover infrastructure expenses related to WWI. At the same time, the cities had great difficulties in finding needed funds. One of the major factors that lead to plummeting local revenue was the loss of alcohol taxes.

Repeal of the 18th Amendment allowed local, state and federal government to reinstate alcohol taxes and increase revenues. State and local governments also gained additional revenue via licensing fees and other alcohol-related charges, and federal alcohol taxes freed up additional money that could be provided to state and city governments in the form of grants, public works, and other assistance. These revenue flows permitted property tax cuts and other tax cuts. Repeal also reduced spending on the enforcement of Prohibition, reduced political corruption, and greatly reduced crime in America. 

It is felt that popular sentiment for repeal was less important in propelling the 21st Amendment than was Congress's desire for increased revenues combined with interest group pressures for lower income tax rates. The tax revolt primarily focused on income taxes. The renewed infusion of alcohol taxes helped to keep the income taxes lower. In fact, repeal of the 18th Amendment worked in conjunction with the bulk of taxpayers being given an income tax cut beginning in 1934.

~

Acknowledgements must be given to Laurel Indalecio, great-great grand niece of Creed Isner, Jacob Sullum, Senior Editor, Reason, Marjorie D. Ruhl, TTB Regulations and Rulings Division, Todd J. Zywicki, Professor of Law, George Mason University School of Law, William Bushong, Historian and Webmaster, White House Historical Association, Frank Aucella, Executive Director, Woodrow Wilson House and Carl Sferrazza Anthony, Consulting Historian, National First Ladies Library for their ideas, directions and stories. Finally, I must thank Walt Kelly for giving the best overview of this part of American history. He is known for a poster he created in 1970 on which Pogo states: “We have met the enemy and he is us.”




References:
1.      John Kobler, Ardent Spirits. The Rise and Fall of Prohibition. 1973.
2.      Gaye Lebaron, “Turns out that homemade wine in Prohibition wasn’t legal”, The Press Democrat, October 22, 2006.
3.      Regulations 60 Relative to Intoxicating Liquor. Revised March 1924. Washington. Article VI. Manufacture of Cider, vinegar, and nonintoxicating fruit juices.
4.      “Calls For Repeal of Volstead Act” New York Times.
5.      “The Volstead Act, October 28, 1919.” Historical Documents in United State History. www.historicaldocuments.com/VolsteadAct.htm
6.      “Not Guilty” Time, Monday, November 24, 1924. www.time.com/time/printout/0,8816,719465,00.htm
7.      Paul Garrett, ‘The Right to Make “Fruit Juices”’, California Grape Growers, 4 (July 1923) 2-3.
8.      Thomas Pinney, A History of Wine in America, 2005
9.      US Dept. of Agriculture, Bureau of Agricultural Economics, Crop Reporting Board, Fruits and Nuts Bearing Acreage, 1919-1946
  1. David T. Beito, Taxpayers in Revolt: Tax Resistance during the Great
Depression (Chapel Hill: University of North Carolina Press, 1989)
  1. Donald Boudreaux and A.C. Pritchard, "The Price of Prohibition," Arizona Law Review,
36(1994): 1-10.
  1. Jack S. Blocker, Jr, “Did Prohibition Really Work? Alcohol Prohibition as a Public Health Innovation”, Am J Public Health. 2006 February; 96(2): 233–243.
  2. Bruce Allen Hardy, "American Privatism and the Urban Fiscal Crisis of the Interwar Years: A Financial Study of the Cities of New York, Chicago, Philadelphia, Detroit, and Boston, 1915-1945," Dissertation Wayne State University, 1977.
  3. Joseph T. Salerno, "War and the Money Machine: Concealing the Costs of War Beneath the Veil of Inflation," The Costs of War: America's Pyrrhic Victories, 2nd edition edited by John V. Denson (New Jersey: Transaction Publishers, 1999)
  4. David Blume Alcohol Can Be a Gas iiEA, Santa Cruz, CA Courtesy of David Blume AlcoholCanBeAGas.com




Volstead Act in Consulting Folder




George Vierra      10 December 2008


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