The Economics of Prohibition

2 The Origins of Prohibition

The strange phenomenon of Prohibition, after an appearance amongst us of over three years, is still non-understandable to the majority of a great, and so-called free, people. It is one of the most astonishing manifestations the world has ever witnessed. It came upon us like a phantom, swiftly; like a thief in the night, taking us by surprise. Yet the Prohibitionists will tell you that no one should be amazed, since for years—for almost a century—quiet forces have been at work to bring about this very thing.

—Charles Hanson Towne, The Rise and Fall of Prohibition

The episode of national alcohol prohibition is one of the most intriguing in American history. As Charles Hanson Towne (1923) suggests, the prohibition movement began long before the constitutional measure was ever contemplated. Alcohol was the stimulus of the entire prohibitionist movement, which promoted the use of the state to stamp out sin and impurity in order to shore up free will against the ravages of individualism. Present prohibitions against narcotics and the movement to outlaw alcohol and tobacco originated in the nineteenth-century battle against alcohol.

Two aspects of the origins of prohibition play major roles in the current politics of prohibition. First, prohibitionists believe that, once started, prohibitions are difficult to stop. Even some opponents of prohibition view legalization as undesirable because, they believe, addiction and crime in illegal markets will spread throughout society. Second, opponents of prohibition allege that it is an attempt by a majority to discriminate against certain minorities. Evidence of such discrimination undercuts the moral authority of prohibition and brings into question the public-spirited aims of prohibitionists.

In addition to these issues, answers to a number of important questions are necessary for a fuller understanding of the political economy of prohibition. For example, What is the source of the demand for prohibition? How are prohibitions adopted as public policy? What factors explain why some prohibitions become stable (narcotics) while others do not (alcohol)?

I will use an interest-group approach to answer these questions. The advances made by Bruce Benson (1984) and Jennifer Roback (1989) enable an explanation of prohibition which captures both the profit-seeking motives of firms and industry associations, as well as the “non-pecuniary gains” and “psychic rents” pursued by reform groups. The success of prohibition rests on the ability of “public-spirited” groups, commercial interests, professional organizations, and bureaucracies to form effective coalitions against consumers and producers of certain products.

Crucial for determining and evaluating the direction of public policy is the source of the “public-spirited” purpose of prohibition. Before Prohibition, the markets for alcohol, narcotics, marijuana, and tobacco were not free. Tobacco products were prohibited in many states during the 1920s. (See J. E. Brooks [1952] concerning intervention on tobacco.) On the contrary, they were the most heavily regulated and taxed markets in the economy. Much of the well-intentioned discontent with the consumption of these products will be shown to be linked to these regulatory policies.

THE PROHIBITION OF ALCOHOL

The development of prohibitionism will be broken down into three periods. The birth of prohibition covers the period from colonial times to the Civil War. The politicalization and growth of prohibitionism occurs from the Civil War to about 1900. The adoption of national prohibitions occurs during the Progressive Era, roughly 1900–1920. The national prohibition of marijuana, which did not occur until 1937, is treated as a consequence of the adoption of alcohol and narcotics prohibition and the repeal of alcohol prohibition.

The Early American Experience

In colonial America alcohol was generally viewed as a normal and practical matter. Three exceptions to this rule provide lessons concerning the control of alcohol consumption.

First, while alcohol was an accepted part of society, the Puritan ethic did discourage excessive use of alcohol. Puritans established sumptuary legislation designed to limit alcohol consumption and to prohibit tobacco consumption. This type of legislation was found to be ineffective and self-defeating and was later abolished (Weeden [1890] 1963 and North 1988).

Second, legislation was passed to prevent the sale of alcohol to Indians, slaves, servants, and apprentices. These restrictions proved to be ineffective and in some cases counterproductive. Free laborers were often provided alcohol rations on the job, while slaves, servants, and apprentices were told to do without. This encouraged them to run away from their masters or to consume alcohol under seedy conditions. The prohibition against selling alcohol to Indians was often avoided, overlooked, or repealed, because liquor opened up valuable opportunities in the fur trade.1

Third, the colony of Georgia was organized as an experimental society by George Oglethorpe to promote temperance. In 1735, restrictions were placed on spirits, and subsidies were provided for beer. This experiment proved successful only with German immigrants, who were grateful for the subsidy on beer. The colony’s wood and raw materials were most eagerly demanded in the West Indies, which could offer little other than rum in exchange (Boorstin 1958, 91–92). The smuggling of rum proved to be an easy task, and even those apprehended had little to fear because juries regularly acquitted violators of the law (Krout 1925, 56–59).

Other methods of intervention into the sale of alcohol were licensing and protectionism, prominent features of the mercantilist philosophy. The license system provided local monopolies on the sale of alcohol in most of colonial America. Such monopolies were granted to innkeepers in order to encourage innkeeping, control the distribution of alcohol, and provide government revenue.

Inns were associated with the extension of trade, economic development, and higher standards of living. They were a place where circuit judges held court, where public meetings were held, and where public discussion and voting took place. Therefore, by encouraging innkeeping, the license system was viewed as an aid to economic, judicial, and political development. This system, however, often benefited political insiders who had an advantage in obtaining these licenses through “good public standing” provisions.

Corruption, poor service, and inferior products were often the result of this system of monopoly. Regulations were established regarding the quality and quantity of accommodations of these inns. As innkeepers reduced unprofitable (but required) services and the quality of their products (lodging, food, alcohol), elaborate regulations detailing the quality and prices of alcohol were established. Despite stringent penalties, these regulations proved difficult to monitor and enforce. It is ironic that the type of institution that this legislation promoted—the saloon—would become the central focus of the Prohibition cause.

Protectionist legislation was enacted in several states and localities to promote distilling and brewing. Alcohol was a remarkably important product in domestic and international trade. According to Harold Underwood Faulkner (1924, 94), “our forefathers were hard drinkers.” Alcohol rations were given to soldiers and laborers as a practical matter of the labor contract and economic custom. Distilling rum was an important business in America. According to John Spenser Bassett (1932, 141), 1,260,000 gallons of rum were produced annually in the Boston area during the early eighteenth century. Rum was a vital component of the triangular trade between the slave coast of Africa, the West Indies sugar plantations, and the rum-producing areas in America.

John Allen Krout concludes:

On the eve of the Revolution, then, spirituous liquor was one of the greatest factors in moving colonial commerce. In whatever branch of trade the merchant invested his capital he relied upon rum or some other form of ardent spirits to earn profits for him. Since the traffic in intoxicants was consistently profitable for all who engaged in it, the public accorded it that approbation which attaches to most things indispensable to the world of business. Nothing short of a revolution in public opinion could remove it from its important place in American life. (1925, 50)

As Krout notes, it was high-potency alcohol that dominated the early American experience with alcohol, although the “ardent spirits” that dominated the market were of poor quality by modern standards. Storage and transportation considerations gave rum, and later whiskey, a natural advantage over beer, and brewers and malt were scarce and therefore expensive. Whiskey was easier to transport than both beer and grain, and whiskey could be stored much longer than beer.

In addition to these natural conditions, a plethora of government interventions distorted this market. Protectionist measures, subsidies, and local monopolies tended to promote the production of alcohol products, while taxation and regulations tended to control their use. Regulation and licensing were repressive forces on the development of alcohol. Monopoly, taxation, and extensive intervention had predictable distortive effects on prices, quantities, product quality, consumer choice, and the quality of competition.2

From Temperance to Prohibition: Remember the Maine Laws

The economic advantage of strong drink combined with the abuses and distortions created by the license system generated increasing concern about intemperance in American society. Reformers began to see the license system as government support for alcohol rather than a control on consumption. Early reformers such as Cotton and Increase Mather, Benjamin Rush (a signer of the Declaration of Independence), and Lyman Beecher led the battle against intemperance. The Massachusetts Society for the Suppression of Intemperance was organized to contain the heavy drinking associated with the War of 1812, and the American Temperance Society was organized in 1826. The temperance movement would evolve into an effective movement that would establish prohibition in thirteen states and territories only to retreat during the development of the Republican party, the abolitionist movement, and the Civil War.

The temperance movement had grown to over a million members by 1833, consisting largely of northern evangelicals from the Baptist, Congregationalist, Methodist, and Presbyterian churches. Born in the revival movements of the 1820s and 1830s, evangelical Protestantism is best described as postmillennial pietism because its adherents believed that there would be a thousand-year kingdom of God on earth and that it was their job to prepare the world for Jesus’ return. It is not surprising that as this group matured it turned increasingly to the power of the state to bolster the battle against alcohol. Ian R. Tyrrell (1979, 7) notes that in addition to the evangelical ministers and their flocks, young, upwardly mobile entrepreneurs supported temperance in order to improve the economy.

The Washingtonians were another important group within the temperance movement, consisting largely of former drinkers. They formed a voluntary organization to provide charity to drunkards and support for those who wished to abstain from drunkenness. The group was similar to Alcoholics Anonymous in organizational structure, membership, and principles. These activists attacked the use of legal suasion as a tactic and criticized the clergy for preaching to the converted upper classes, rather than working with those who needed their help the most. The Washingtonians donated more money to the needy than other temperance organizations, despite being generally of modest means. They attracted many members, raised lots of money, and converted many drunkards. The Washingtonian societies were later co-opted by the newly formed Sons of Temperance (a fraternal organization) and other temperance and prohibitionist organizations.3

It is useful to illustrate the transition from temperance to prohibition as a four-phase process. In the first phase, intemperance was understood as excessive drinking and drunkenness. The solution was to educate the public about the dangers of alcohol. Reformers stressed that spirits should be used in moderation and that education by example could achieve temperance in society. Beer and wine were generally of no or little concern to reformers at this time.

The second phase involved a turn toward abstinence from spirits. Again, this goal was to be achieved through voluntary means and education by example. It was during this phase that the temperance societies were formed and strengthened. The pledge of abstinence became a prominent and important tool for the organization and radicalization of the temperance movement.

The next phase began as a battle between temperance forces. The new force that ultimately dominated was the radical element, which called for total abstinence from all alcoholic beverages, including beer and wine. This faction was initially viewed as a threat to social custom, individual liberty, and religious tradition, and as unnecessary to the achievement of temperance. The total-abstinence groups dominated other groups through superior organization, fund-raising, and recruitment of new members.

A concurrent development and debate ensued about the choice between voluntary and coercive means to achieve temperance. The traditional philosophy had been that the means to achieve temperance should be voluntary. Education, leading by example, and obtaining signatures on abstinence pledges were the tools of the temperance movement. The strategy was successful as measured by the number of members, the number of local groups, and the number of signers of the various abstinence pledges.

The coercive strategy, however, gained increasing attention and importance as temperance forces grew frustrated and impatient with the long and difficult process involved with their strategy. The conversion of nondrinkers, teetotalers, reformed alcoholics, and evangelical Protestants was relatively easy compared with the conversion of heavy drinkers and members of immigrant groups in which alcohol was part of social and religious custom. These impatient prohibitionists often blamed their frustration on the lure of alcohol and the profits that accrued to sellers of alcohol.

This phase represented a change in strategy toward the coercive means of government. The license system, which condoned alcohol use, was to be replaced by some form of direct restriction on alcohol consumption. The history of this phase is characterized by temperance forces organizing coalitions in order to pass restrictive legislation, such as local option, quantity sale requirements, and local prohibitions. These restrictions ultimately failed to achieve their intended results, proved difficult to enforce, and led to unintended consequences, such as increased intemperance, poor-quality alcohol, and the existence of unsavory drinking establishments.

The radical strategists were increasingly successful in establishing these interventionist measures. True temperance organizations such as the Washingtonians weakened while prohibitionists strengthened themselves politically through alliances with the abolitionist and anti-immigrant movements.

Interventionism, like the temperance organizations, was unable to establish total abstinence in society. After each failure, temperance groups would advocate more stringent policies. Typically, the radical strategy began with minimum-purchase requirements, then moved to local licensing options, and finally to local prohibitions.4 Each of these measures either failed to achieve the desired result or proved difficult to enforce. Competitive pressures and the lure of profits kept the supply of alcohol flowing. It was this process that led to statewide prohibition in Maine in 1851 (Byrne 1969).

The author of the law, Neal Dow, promoted it as a model to be spread across the nation, and indeed many of the northern states and territories adopted the law between 1851 and 1855. In many cases “Maine laws” were simply stronger versions of existing laws against liquor. Maine laws allowed for search and seizure, reduced the requirements for conviction, increased fines, and called for mandatory imprisonment and destruction of captured liquor.

But the rapid success of this prohibition movement was short-lived. By 1880 only Vermont, Maine, and New Hampshire remained dry at the state level. Among the many reasons for the failure of the Maine laws was the opposition of Irish and German immigrants. These rapidly growing immigrant groups, as well as the drinking native population, opposed and often openly violated the prohibition.

The Maine laws suffered several setbacks in court. In many states the courts ruled that the laws or certain aspects of the law (especially the search and seizure aspects) were illegal. Ironically, the birth of the Republican party (political home for most prohibitionists) and the tide against slavery also reduced prohibitionism. Republicans understood that an outright embrace of prohibitionism would be divisive for the new party (William Gienapp 1987). The slavery issue was drawing an increasing amount of public attention away from the alcohol problem.

By far the most telling aspect of the Maine laws was ineffective enforcement. Professional police forces existed in only a few large cities, which tended to be dominated by hard-drinking immigrant populations. This meant that prohibitionists would have to organize and finance enforcement efforts. The prohibitionists were initially active in enforcing the laws, but they found this costly. They also found that many drinkers simply did not accept the authority of democratically determined morality.

One notable event involved the father of the Maine law and mayor of Portland, Neal Dow. Dow was accused by opponents of personally profiting from the government-controlled sale of alcohol for industrial and medicinal purposes. As described by Tyrrell the confrontation between Dow and his accusers had a dramatic effect on the momentum of the prohibitionist movements:

An angry mob assembled at the liquor agency on the night of June 2, 1855, after the existence of the liquor had become common knowledge. The mob demanded destruction of the liquor and threatened to break into the agency if the demand were not met and Neal Dow arrested for violation of his own law. Dow, who was always quick to look to force in defense of morality, assembled the local Rifle Guards. In the confrontation which followed with the stone-throwing mob, Dow ordered his troops to fire when several rioters broke into the liquor agency. (1979, 295–99)

Dow was labeled a fanatic and a murderer (Byrne 1969, 60–69). The emerging distilling, brewing, and saloon interests made the “tyranny” of Dow and the Maine laws a major issue of subsequent elections, and the prohibition movement quickly retreated from political prominence.

The Coalition of Prohibition

The second half of the nineteenth century was a period of retrenchment and coalition building for the prohibitionist movement. After the defeat of the Confederacy and the “reconstruction” of the South, social reformers once again turned their full attention to eliminating evil spirits from society. (See Richard Jensen [1971; 1983] and Joel H. Silbey [1967; 1973; 1978] for the important political changes in the second half of the nineteenth century.)

The important parts of this reform movement consisted of the women’s movement, the Prohibition party, the Anti-Saloon League, and professional organizations. Structural changes within the major political parties also provided a catalyst for national prohibition. As was the case before the Civil War, evangelical Protestantism was a central force in all these parts, and alcohol was but the leading villain for a prohibitionist movement that was preparing the earth for the coming of Jesus.

Women were an important source of support for prohibition. The woman-suffrage movement, which was born before the Civil War, reemerged in full bloom in 1869. In that year the National Woman Suffrage Association and the American Woman Suffrage Association were formed, and women received the right to vote in the Wyoming and Utah territories. Several leaders of the suffrage movement, such as Susan B. Anthony, Elizabeth Cady Stanton, and Lucy Stone, were involved in the temperance movement (Rosenstone, Behr, and Lazarus 1984, 75). Between the suffragettes and the female abolitionists, women swelled the ranks of prohibitionist organizations.

In 1873 the Women’s Christian Temperance Union was formed to unite Protestant women behind the cause of prohibition. Women believed that they would be the prime beneficiary of temperance because intemperance was generally a male problem, more specifically, a husband problem (Grimes 1967, 78). Women also played a prominent part in both the Prohibition party and the Anti-Saloon League. The relationship between suffrage and prohibition was a two-way street: prohibitionists and nativists supported woman suffrage because it was felt that women would vote for prohibition and immigration restrictions (Grimes 1967, 140–44).

The formation of the Prohibition party in 1869 and its first presidential campaign were the most tangible manifestations of the politicalization of the temperance movement. The third oldest party in the history of the United States is often characterized as ineffective and of little importance to the Prohibition movement. This interpretation, however, overlooks the role of third-party movements: the introduction of public policy, attraction of public attention to social problems, accurate demonstration of voter preferences, creation of pressure for changes in the major political parties, and provision of political experience and training for reformers.

The Prohibition party was the first party to endorse prohibition of alcohol, child-labor laws, direct election of senators, an income tax, and woman suffrage. All these “reforms” were eventually incorporated into the platforms of the major parties and passed into law. Temperance advocates gained insight into politics and political experience, which they applied to later efforts. As late as 1926 the Prohibition party was a member of a coalition consisting of the Women’s Christian Temperance Union, the Anti-Saloon League, and local organizations which defeated the Republican senator James Wadsworth of New York, a leading supporter of the repeal of Prohibition. Valdimer O. Key (1958, 171) discusses the division of labor between political parties and special-interest groups:

In the workings of the political system a division of labor occurs between political parties and pressure groups. This is not necessarily a clean-cut separation of functions. Parties perform some functions almost never undertaken by pressure groups; and some of the activities of groups—and perhaps most of the activities of many groups—concern matters that parties seldom take a position on. On the other hand, on some matters parties and at least some groups work either in collaboration or in opposition.

Given a division of labor between pressure groups and political parties, it would be easy to overlook the fundamental importance of this third party. Peter H. Odegard, however, one of the important historians of the Anti-Saloon League, points out: “It would, of course, be erroneous to minimize the importance of the Prohibition Party in creating dry sentiment. The long and persistent battle which it waged certainly made the League’s fight less difficult” ([1928] 1966, 101–3). It would be appropriate to consider the Prohibition party an important component of the politicization and political success of the prohibition movement.

The presidential vote total of the Prohibition party rose from 0.05 percent in 1872 to 2.25 percent in 1892, peaking just before the state prohibition movement. States in which the Prohibition party had the most success were the ones in which prohibition was first enacted.5 More important, the Prohibition party was draining votes away from the Republicans (Kleppner 1979, 246–48). Combined with Populist party victories and economic depression, the agitation of the Prohibition party helped bring about dramatic realignment of the major parties.

During the 1890s the Republicans dropped prohibition in favor of moderation and woman suffrage in order to compete for the growing German vote. At the same time, William Jennings Bryan won the presidential nomination of the Democratic party. Best known for his role in the Scopes trial and free-silver position, Bryan captured the Prohibition party and appealed to the pietistic Protestants of the West, Midwest, and South (Kleppner 1987, 108–13 and 1982).

The Anti-Saloon League and the Adoption of Prohibition

The growing recognition of the failure of party politics to establish national prohibition and the natural impatience of the reformers led to the formation of the Anti-Saloon League in 1895. The league was the political arm of the Baptist, Congregationalist, Methodist, and Presbyterian churches. It was the league that collected and directed the efforts of prohibitionists in order to take advantage of the opportunity World War I provided.

The church-dominated league consisted of a complex bureaucratic network supported by membership fees and individual donations. Its principal means of agitating for prohibition and local option was the operation of a publishing company that produced pamphlets and paid speakers to denounce alcohol from the pulpit at any available opportunity. The league itself described the campaign for prohibition as “the Church in action against the saloon” (Odegard 1960, 116).

The league grew quickly. Only two state organizations of the league had been established by 1895, but forty-two states or territories had local organizations by 1904 (Blocker 1976, 157). Odegard ([1928] 1966, 20–21) estimates that when Prohibition was enacted, the league had the cooperation of 30,000 churches and 60,000 agencies.

The activity of the league began with an emphasis on local option. This proved to be a successful strategy in establishing prohibition in rural areas and jurisdictions dominated by Protestants. The league later turned to statewide prohibition and intimidation of major-party candidates. It used the evangelical-prohibitionist vote to swing elections away from uncooperative candidates and toward supporters of their cause.

Despite its Yankee Republican origins, the prohibition movement and the league’s success moved west and south. The South was becoming increasingly “Yankeefied” and evangelical. Odegard ([1928] 1966, 81) examined voting patterns and found that the league’s support came overwhelmingly from Democrats in the South and Republicans in the North. The drive toward state prohibition succeeded largely in rural and Protestant states, such as those in the South that were over 80 percent rural and 80 percent Protestant and in the less populous states of the West. The states and large cities of the Northeast outside New England remained dominated by Irish Democrats and wet Republicans. Jack S. Blocker (1976, 238) indicates that Prohibition never represented the majority opinion, suggesting that the success of Prohibition was based on logrolling.

Actually the league relied on a variety of politically expedient strategies, including intimidation of political candidates and officeholders. By 1915 the league had completely split with the voluntary and educational efforts of temperance. It had become an organized effort by evangelical Protestant churches to use politics to coerce temperance through prohibition.

The league was often criticized for its tactics by supporters, the Prohibition party, and church groups, as well as its opponents. The league’s strategy of political opportunism, consisting of large payments to professional reformers and the direct use of the pulpit for political purposes, was often criticized by member churches. The league’s criticism of blacks and Catholics, comparing them to the Ku Klux Klan or characterizing them as noncitizens or nonhumans who would sell their vote for a drink, was also criticized.

According to Odegard (1966, 74), at the height of its propaganda campaign, the league was publishing forty tons of literature each month. This indirect approach was immune to the charges and restrictions levied on the direct approach of the alcohol industry. The alcohol industry was subject to the Corrupt Practices Act which was established to monitor lobbying efforts and to prevent corruption. However, the league did not file under the Corrupt Practices Act until after Prohibition had been enacted, and then only under protest. Odegard notes that “in failing to make returns [reports of contributions and activities] for the years 1910 to 1918 the national organization certainly violated the spirit of the Corrupt Practices Act and possibly the letter” (1966, 210). The league was therefore able to spend large sums of money (as much as $2,500,000 per year) to promote its cause without coming under the same public scrutiny as the alcohol industry (Odegard 1966, 181).

The league’s fund-raising success was based in part on its organization of business support against alcohol. The key to this success was that the names of the principal contributors were kept secret. This secrecy was crucial to the success of the antisaloon campaign, and as Warburton (1932, 263) notes, statistical investigations have provided little support for determining the extent of commercial rent seeking against the alcohol industry.

It is known that A. I. Root of the Root Beer Company made substantial contributions during the formation of the league. John D. Rockefeller admitted to contributing over $350,000 to the league, although unsubstantiated claims place that figure in the tens of millions of dollars. The Brewers’ Association put forward a list of “known” contributors, which included officers of Roger Peet and Company, several owners of motor car companies, James Horton of the Horton Ice Cream Company, the U.S. Steel Corporation, John Wanamaker, and several prominent officers of major corporations. Owners and operators of such companies as Coca-Cola and Welch’s Grape Juice, which could expect to benefit from prohibition, were also suspected of being heavy contributors to the cause (Odegard 1966, 271).

The Progressive Era and Prohibition

The Progressive Era represented an overhaul of American society. The combination of “progressive” thinking and World War I provided the ideal opportunity to enact national alcohol prohibition. The league provided both a clear objective (the end of the saloon) and the organization, so that a coalition of evangelical Protestants, women, professional organizations, and commercial interests could take advantage of this opportunity.6

American society changed in many important respects during the Progressive Era. In political matters, the initiative, referendum, recall, direct election of senators, woman suffrage, and adoption of the Australian ballot and shortened ballot were both goals of the majority and means of achieving other Progressive reforms. Many of these changes promoted the prohibitionist cause. For example, James Bryce (1910, 49) notes that the Australian ballot placed illiterate and immigrant voters (who generally opposed prohibition) at a considerable disadvantage because they now had to be able to read the ballot. In addition, alien voting was outlawed, and registration requirements were established in many cities, both restricting the power of immigrants and enhancing the prohibitionist position.

A long list of economic reforms was passed during the Progressive Era. These reforms included child-labor laws, public-education laws, labor and labor-union legislation, immigration restrictions, money and banking reform (the Federal Reserve Act), antitrust policy, and the income tax.

The Progressive movement was based largely on the fears of middle- and upper-class citizens in a rapidly changing society. Big business was seen as a threat to the economic system and to social stability. The lower-class and immigrant populations were growing and congregating in the rapidly expanding urban areas. While Progressive policies were new to American government, they were largely the result of a conservatism and an attempt to fix society, enforce middle-class morality, and protect the old-stock American way of life. Timberlake (1963, 1) concludes that in order “to achieve these ends, the Progressive Movement embraced a wide variety of individual reforms, one of the more important and least understood of which was prohibition.”

The scientific arguments for prohibition were based largely on studies of the effects of alcohol.7 Important evidence that associated alcohol with crime, poverty, disease, broken homes, social vices, and other evils was gathered. The correlation established in these early studies transformed social science from a science which examined individual character based on free will to one which placed primary emphasis on the environment. According to Timberlake (1963, 60), “the chief effect of these sociological data was to persuade many people to turn to saloon suppression and prohibition” in order to improve the environment.

The saloon was the natural target of prohibition forces. It served a variety of functions for the poor, working, and immigrant classes. There they found comfort, entertainment, games, political discussion, job opportunities, and much more.8 The saloonkeeper was the friend, confidant, and political leader of his regular customers. The reputation of the saloon became tarnished, however, through its association with widespread corruption, criminal activity, vote-buying, and monopoly power.

Saloonkeepers in several states often found it difficult to pay the annual license fees. One method of financing these fees was to have a brewer pay the fee in return for exclusive selling rights. Another method was to defy blue laws to generate additional revenues. Staying open for business on Sundays helped not only to pay the government fees but also to help retain the saloon’s working-class customers who drank on Sundays.

To avoid the blue laws, bribes were paid to police and elected officials. These bribes came in the form of either money or votes. Another practice was to serve poor-quality or watered-down liquor as premium brands. Saloonkeepers also expanded their income with kickbacks from prostitutes, gamblers, and in a few instances pickpockets whom they allowed to use their facilities. Again the saloonkeeper protected himself by paying bribes to the local police and elected officials. According to Timberlake (1963, 110): “The liquor industry became thoroughly involved in political corruption through its connection with the saloon. The root of the trouble here was that the ordinary saloonkeeper, confronted by overcompetition, was practically forced to disobey the liquor laws and to ally himself with vice and crime in order to survive. Unable to make a living honestly, he did so dishonestly.”

Prohibition forces focused on this crime-ridden industry that was capable of corrupting both the political leadership of the country and the lives of the poor immigrants. The success of National Alcohol Prohibition depended vitally on defining its goal as ridding America of the saloon. It should be noted, however, that high license fees, excise taxes, and other political requirements were responsible for this “overcompetition” and dishonest activity.

The alcohol industry had organized to protect itself from prohibition by establishing the United States Brewers’ Association in 1862 and the National Retail Liquor Dealers’ Association in 1893. Although it used its tremendous resources directly to affect elections and legislation, the alcohol industry was held accountable to the Corrupt Practices Act and suffered several election-law setbacks. These changes were partially responsible for the success of Prohibition. For example, the Australian ballot and other changes that occurred between 1890 and 1910 not only restricted immigrant voting but limited the alcohol industry’s ability to influence elections by purchasing votes. Gary M. Anderson and Robert D. Tollison (1988) argue that the inability to allocate votes efficiently as a result of voter-secrecy laws causes instability in electoral outcomes and therefore contributes to the growth of government. The alcohol industry’s political activities were further curtailed by an election-fraud conviction in Texas and an investigation in Pennsylvania that resulted in a million-dollar fine (Sait 1939, 149n.).

The coalition between the liquor interests and brewers broke down during World War I with the passage of the Lever Act. The act distinguished between hard liquor, which would be forbidden, and beer and wine, which would be restricted in order to free resources for the war effort. The beer industry tried to protect its interests by dissociating from the distillers: “‘The true relationship with beer,’ insisted the United States Brewers’ Association, ‘is with light wines and soft drinks—not with hard liquors. . . .’ The brewers affirmed their desire to ‘sever, once and for all, the shackles that bound our wholesome productions . . . to ardent spirits. . . .’ But this craven attitude would do the brewers no good” (Rothbard 1989, 86). Once the coalition was broken, prohibitionists turned their sights to the brewers, employing the anti-German sentiment and wartime patriotism provided by World War I to achieve their goals (Rothbard 1989).

A good deal of the political success of Prohibition can also be attributed to the fact that it attacked the saloon and did not include any injunction against the consumer of alcohol. Only the producers and distributors of the products were legally restricted. This tactic removed the personal-liberty argument, did not alienate the general population, and, most important, increased the isolation of the alcohol industry.9

The history of alcohol reveals several important components of the demand for prohibition that are consistent with the interest-group theory of the origins of prohibitionism. The basic demand for temperance is found in reform movements and evangelical postmillennial Protestantism. This temperance movement is then transformed into a prohibition movement through access to the political process. The prohibition movement develops and is joined by commercial rent seekers, such as competitors of the alcohol industry.10

NATIONAL NARCOTICS PROHIBITION

The national prohibition on narcotics was adopted before that on alcohol and has continued to the present day. This prohibition has several important factors in common with alcohol prohibition—evangelical Protestant and Progressive backing, the general impatience with progress in counteracting drug abuse, discrimination against minority immigrant groups, the unintended and unperceived consequences of government intervention, and the window of opportunity provided by World War I. Narcotics prohibition also had some important differences in the coalition that supported it. A primary difference was the role of the medical and pharmaceutical professions, which used narcotics control as a means of uniting and consolidating their professions into powerful interest groups. As David Musto notes, “Medicine and pharmacy were in active stages of professional organization when they became involved with the issue of narcotic control. . . . Their intense battles for professional advancement and unification had an effect on the progress and final form of antinarcotic legislation” (1987, 13). Politicians also took an active role in narcotics control. According to Arnold Taylor (1969) narcotics control was used to achieve influence in relations with China. And finally, bureaucrats helped to transform the regulatory role established by this coalition into a prohibition administered by a federal bureaucracy. An important reason for the longevity of narcotics prohibition is that consumers of narcotics, unlike alcohol consumers, have always been a small fraction of the population.

The Narcotics Problem

The raw materials for narcotics—opium and coca leaves—had been used for centuries in Asian and South American cultures before their introduction to America. Technological inventions and discoveries during the nineteenth century, such as morphine (1803), the hypodermic syringe, cocaine, chloral hydrate (1868), and heroin (1898), greatly increased the use and applicability of narcotics. Initially, these developments increased the prestige of the pharmaceutical industry and the medical profession’s ability to cure diseases and alleviate pain. It should be remembered that the healing profession still relied on practices such as bloodletting, blistering, and mercury cures. It should also be noted that in addition to alleviating pain (aspirin was not commercially available until 1899), narcotics were valuable anesthetics and curatives. Courtwright (1982) cites the medical profession as the major source of opiate addiction.

In explaining the growth of narcotics addiction in America, authorities have often cited the Civil War. Many soldiers from both the North and South became addicts during the war. While many historians downplay the role of the Civil War, Courtwright (1982, 55) reports that 10,000,000 opium pills and 2,841,000 ounces of opium powders and tinctures were issued to the Union army alone. Statistics indicate, however, that consumption of opium was already on the increase in the 1840s.

The alcohol prohibition movement unwittingly played a significant role in the spread of opium addiction. The lack of supply of alcohol and the stigma attached to it no doubt encouraged the substitution of opiates that occurred in the middle of the nineteenth century. Dr. F. E. Oliver (1872) addressed this issue at great length:

The question how far the prohibition of alcoholic liquors has led to the substitution of opium, we do not propose to consider. It is a significant fact, however, that both in England and in this country, the total abstinence movement was almost immediately followed by an increased consumption of opium. In the five years after this movement began in England, the annual importations of this drug had more than doubled; and it was between 1840 and 1850, soon after teetotalism had become a fixed fact, that our own importations of opium swelled, says Dr. Calkins, in the ratio of 3.5 to 1, and when prices had become enhanced by fifty per cent “the habit of opium chewing,” says Dr. Stille, “has become very prevalent in the British Islands, especially since the use of alcoholic drinks has been to so great an extent abandoned, under the influence of the fashion introduced by total abstinence societies, founded upon mere social expediency, and not upon that religious authority which enjoins temperance in all things, whether eating or drinking, whether in alcohol or in opium.” And, in other countries, we find that where the heat of the climate or religious enactments restrict the use of alcohol, the inhabitants are led to seek stimulation in the use of opium. Morewood, also, in his comprehensive History of Inebriating Liquors, states that the general use of opium and other exhilarating substances, among the Mahometans, may date its origins from the mandate of the Prophet forbidding wine. These statements accord with the observations of several of our correspondents, who attribute the increasing use of opium to the difficulty of obtaining alcoholic drinks. It is a curious and interesting fact, on the other hand, that in Turkey, while the use of wine of late years has increased, that of opium has as certainly declined.

General economic progress also helped to bring the average American increasingly into contact with doctors, health-care facilities, and the multipurpose narcotic. It was also this progress that helped bring the problems of drug abuse and addiction to the attention of the general public after the Civil War: “The United States always had a ‘drug problem,’ though the public remained uninformed about it. But rapid communication eroded that ignorance after 1865. Like the railroad station and the courthouse, the sanitarium was becoming a monument to civilization” (Morgan 1974, 3). In fact, the term “addiction” was coined long after the Civil War by the Swedish doctor Magnus Huss (1807–90). The realization of narcotic addiction brought about efforts by doctors and patent-medicine companies to discover the cause, the cure, and methods to reduce abuse. Some progress was made in understanding the cause and cure of addiction, even by modern standards.

The Professional Movement

The American Medical Association (AMA), founded in 1847, and the American Pharmaceutical Association (APhA), founded in 1852, played important roles in the prohibition movement. They began as splinter groups within the medical and drug-dispensing industries. Their goals centered on the establishment of professional standards in order to restrict entry. This desire to implement standards initially aroused both suspicion and opposition from within their own ranks.

A common interest of the associations was the regulation of sellers of narcotics as a means of the advancement of the associates’ economic goals and as a cure for growing social problems. Both associations also supported the call for alcohol prohibition. Another common interest was the destruction of an economic rival—the patent-drug industry.

The patent-drug industry had gained a substantial advantage over doctors and pharmacists as the result of improving technology, commercial practices, transportation, and communication. Patent medicines could be purchased anywhere by mail, while doctors and pharmacists were generally located in populated areas.

The AMA and the APhA were not completely united on policy matters. Indeed, much of the rent-seeking battles hinged on the competition between pharmacists and doctors who dispensed their own medicines. Despite this rivalry, Musto claims that “Physicians and pharmacists were vocal and effective in their lobbying efforts. Each saw that in addition to aiding the public welfare, strict narcotic laws could be a distinct advantage for institutional development if great care was exercised in their framing” (1987, 14).

The two professions were not the only two pressure groups involved in developing narcotics legislation. The National Drug Wholesalers Association, the Association of Retail Druggists, and other groups also participated. Public opinion was such that by the turn of the century it was not so much a matter of whether something should be done but rather what should be done, and more specifically how prohibition should be established. This situation provided a natural invitation for the medical and pharmaceutical industries to assist, as experts, in the development of antinarcotic legislation, and indeed the ultimate legislative outcome was largely determined by the interests of these groups.11

The Harrison Narcotics Act

The Harrison Narcotics Act was passed in 1914. It represents the first federal regulation to restrict the sale of drugs and is the basis of the current prohibition against narcotics. The Harrison Act represents the culmination of the haphazard work of a variety of interest groups joined against narcotics. According to Eldridge “The enactment of the Harrison Act marked an embarkation upon a totally new approach to the narcotics problem. That approach can best be described as an effort which set out to control the non-medical use of narcotics and evolved into the prohibition of non-medical uses and the control of medical uses” (1967, 9).

The first laws against the smoking of opium were passed in the western states. The use of opium was spread by the Chinese who migrated with the construction of railroads and used opium for a variety of medicinal and recreational purposes. The laws, often explicitly discriminatory against Chinese immigrants, were largely ineffective, because the Chinese formed close-knit social structures. In addition, there was no organized enforcement mechanism. To the extent these laws were effective, however, they tended to stimulate the use of less conspicuous forms of opium (that is, smokeless), the mail-order drug business, smuggling, and illicit opium dens.

Cocaine was viewed as a wonder drug and was used as an ingredient in a variety of commercial products, such as wine, Coca-Cola, and tonics. States began to ban the open sale of cocaine after 1900. In the South, cocaine prohibitions were in part based on the fear that blacks would substitute cocaine for alcohol after alcohol sales had been prohibited. It was claimed that cocaine use made blacks crazed criminals and violent rapists, as well as impervious to .32 caliber bullets.

A major source of opiates was patent medicines. Only a small proportion of these products was consumed by persons who became addicted to them. Most patent medicine was used for pain relief and disease without addiction, or by babies who could not carry on a habit. Many addicts continued their addictions with patent medicines, while some unwittingly did so with opium-based addiction cures.

The real tragedy of the patent-medicine episode was the addiction of unsuspecting (and previously unaddicted) consumers. Many states banned opium, morphine, and heroin about the turn of the century, but the bans were largely ineffective for a variety of reasons. The most notable reason was that patent-medicine companies could readily obtain exemptions from the bans. These exemptions resulted in the widespread availability in unmarked form of a prohibited substance. The consequent addiction of many unsuspecting consumers can be attributed to state prohibitions and the exemptions granted rather than to the callousness or stupidity of patent-medicine companies.

The year 1906 was a watershed in the development of the national prohibition of narcotics. Media accounts of “abuse” by patent-medicine companies and the widespread failure of state bans helped promote a consensus on drug-abuse policy. The District of Columbia Pharmacy Act and the Pure Food and Drug Act were both passed in 1906 in order to halt the abuses by patent-drug companies and unlicensed competitors.

The Pure Food and Drug Act of 1906 was the first important piece of federal legislation directed at drug abuse. It mandated that patent-medicine companies list the ingredients of their products on the label. The result attributed to this legislation was the decline in sales of patent medicines.12 The success of passing the act gave political experience and encouragement to the AMA, the APhA, and the wholesale-drug industry. The success of the law in limiting competition also encouraged them to increase their legislative efforts.

The Pharmacy Act was a trial balloon promulgated with the consent of the trade associations, physicians, and pharmacists. Indeed, the law was based on a model law, developed by the American Pharmaceutical Association, that exempted physicians who sold medicine to their own patients. This law had the effect of controlling competition from unlicensed (and unorganized) sellers of drugs, such as door-to-door salesmen. The final version of the law was a compromise between reformers, physicians, pharmacists, the drug industry, and Congress (Musto 1987, 21–22).

The Spanish-American War had officially moved the United States into the ranks of the world’s imperialist-colonial powers. Addiction and a newfound influence in the Far East brought narcotics use to a new level of importance. Western countries had used military power to open up the opium trade and to extend trading opportunities in China. The United States sought to increase its influence with China, lessen China’s concern over the widespread discrimination against immigrant Chinese, and stop the source of its own drug problems by establishing international agreements on the control of narcotics.

Theodore Roosevelt promoted the Second Hague Peace Conference in order to establish an international agreement on the elimination of opium abuse. During the conference, in 1909, Congress quickly enacted a ban on the importation of smoking opium to relieve the embarrassment of the United States’ delegation over a lack of federal laws of its own. This was the only legislation that would not offend the special-interest groups and could be quickly passed by Congress. This face-saving maneuver, however, did not achieve the original goals of Roosevelt or placate those interested in using that international forum as a method of imposing more restrictive domestic measures on narcotics use.

Continued attempts by the federal government (politicians) to gain influence in China and to control domestic narcotic sales led to the drafting of the Foster Anti-Narcotic Bill. Although it never passed Congress, the bill formed the basis of the Harrison Act. Based on the federal government’s revenue powers, the bill was comprehensive and imposed heavy penalties on violators. The bill was to apply to all products containing even minute amounts of opiates, cocaine, chloral hydrate, or cannabis. It required that sellers keep extensive records, pay license fees, and purchase bonds and revenue stamps. Penalties consisted of fines of $500 to $5,000 and imprisonment from one to five years.

The Foster bill was not popular with the drug interests because it placed the blame and the financial burden on pharmacists, physicians, and drug companies. Wholesale druggists and drug manufacturers attacked the inclusion of cannabis, the costly reporting requirements, and the severe penalties imposed by the bill. The American Pharmaceutical Association, social reformers, and bureaucrats wanted strong legislation, covering even cannabis and caffeine. Because of a lack of agreement between these groups, the Foster bill was eventually defeated (Musto 1987, 40–48).

The effort to control narcotics was placed in the hands of Congressman Francis Burton Harrison. In response, the American Pharmaceutical Association organized the National Drug Trade Conference, which consisted of the American Association of Pharmaceutical Chemists, the National Association of Medicinal Products, the National Association of Retail Druggists, and the National Wholesale Druggists’ Association, all of which opposed aspects of a Foster-type bill.

In seeking a compromise between political and industry interests, Harrison squashed the influence of the reformers and bureaucrats. Harrison sought the direct counsel of the National Drug Trade Council in order to rewrite the Foster bill for passage. The American Medical Association had nearly quadrupled its membership from 1900 to 1913, and its interest was to obtain legislation which did not impinge on the rights of doctors to sell drugs. The pharmacists’ lobby had long sought a monopoly on dispensing drugs. The sale of medicines by doctors was of decreasing importance, however, and the APhA was content with equal and less stringent record-keeping requirements. Musto described the final version of the Harrison Act as a series of compromises between the drug interests, the medical profession, reformers, and bureaucrats:

The descendant of the stricter Foster bill, the Harrison bill of 1913 had incorporated numerous compromises. Records were simplified; standard order blanks would be filled in by any purchaser of narcotics and kept for two years so that the revenue agents could inspect them at will. Physicians could dispense drugs without keeping records if in actual attendance on their patients. Numerous patent medicines containing no more than the permitted amounts of morphine, cocaine, opium, and heroin could continue to be sold by mail order and in general stores. Everyone dealing in narcotics except the consumer would have to be registered. Retail dealers or practicing physicians could obtain a tax stamp for one dollar a year. No bond was required, the drugs were not taxed by weight, and chloral hydrate and cannabis were omitted in the final version. (1987, 51–65)

In other words, the legislation gave pharmacists and doctors a carefully divided monopoly over the sale of narcotics, without offending related industries and without imposing much cost or burden on the monopolists themselves. At the same time, it did remove the influence, power, and control of bureaucrats, which was a notable feature of the Foster bill.

With the passage of the Harrison Act, the Bureau of Internal Revenue began to administer the new law. It had experience in collecting taxes, issuing revenue stamps, and registering participants. The bureau began to explore its authority and to answer practical questions of the law. It issued new regulations that placed increased burdens on sellers of narcotics and that conflicted with the interest groups’ interpretation of the law. Second, and more important, was its assault on the maintenance of narcotic addicts.

The Bureau of Internal Revenue sought to eliminate addict maintenance by physicians, but these efforts were continually rebuffed by the courts. It was not until 1919 that the maintenance of addiction, and therefore strict prohibition of narcotics, was established. The prohibition was based on an amendment that strengthened the Harrison Act and on a favorable Supreme Court decision that upheld the elimination of maintenance programs.

The dramatic change in policy is linked to the enactment of (alcohol) Prohibition in 1919, the concerted efforts of bureaucrats, and events relating to World War I. The Prohibition amendment gave added authority to arguments for narcotics prohibition. It also established the fear that people deprived of alcohol would turn to narcotics. The Treasury Department’s Special Committee on Narcotics produced a report, Traffic in Narcotic Drugs, in which questionable statistics (based on survey information) were used to paint a grim picture of future narcotics use in the absence of a total prohibition. In addition, World War I added fuel to the prohibition fires. Concern for efficiency, the Communist threat, and wartime patriotism helped to provide public support for measures that had been considered unconstitutional. As a result, the Narcotics Division of the Prohibition Unit of the Treasury Department was able to establish what was essentially a prohibition on narcotics.

In retrospect, the haphazard rent-seeking process that led to the current narcotics prohibition was not a sensible basis for legislation. Political influence in China, the promotion of medical-interest groups, Prohibition, and the initial problems associated with narcotics were one-time factors which no longer exist as support for prohibition.

NATIONAL MARIJUANA PROHIBITION

Prohibition seems incompatible with the historical, cultural, and economic significance of marijuana. As Ernest L. Abel notes, “Cannabis is undoubtedly one of the world’s most remarkable plants. Virtually every part of it has been used and valued at one time or another. Its roots have been boiled to make medicine; its seeds have been eaten as food by both animals and men, been crushed to make industrial oils, and been thrown onto blazing fires to release the minute intoxicating cannabinoids within; the fibers along its stem have been prized above all other fibers because of their strength and durability; and its resin-laden leaves have been chewed, steeped in boiling water, or smoked as a medicine and an intoxicant” (1980, 269–70). Marijuana prohibition is also a curiosity because it was enacted before the use of marijuana as a recreational drug became widespread. These questions and the current importance of marijuana in the underground economy have led researchers to examine the origins of marijuana prohibition.

Two hypotheses have dominated the discussion of the origins of marijuana prohibition. The first is the “Anslinger hypothesis” developed by Howard Becker in the 1950s. Howard Becker (1963) argues that the Federal Narcotics Bureau, headed by the former Prohibition commissioner Harry Anslinger, played an entrepreneurial role in bringing marijuana to the attention of the general public. For example, Anslinger is responsible for developing the “killer weed” concept, and virtually all the popular articles published before the passage of the Marijuana Tax Act of 1937 acknowledge the help of his bureau and its publications.

Becker does not say the bureau sought this legislation, or why it did so at that time. Joel Fort (1969) argues that the bureau was seeking publicity, while Erich Goode (1972) maintains that the bureau was seeking to impose its own morality on society. Donald T. Dickson (1968) contends that the bureau was merely following its self-interest in the form of bureaucratic growth and survival of the budget cuts of the Great Depression. Jerome L. Himmelstein (1983) argues that the bureau was trying to sustain itself by limiting its responsibility and maintaining only a policy-setting role. All these hypotheses have some validity, although no single one, nor any combination of them, fully explains the origin of marijuana prohibition.

The “Mexican hypothesis,” as developed by David F. Musto (1973) and John Helmer (1975), suggests that marijuana prohibition was a reaction against Mexican immigrants and others, such as blacks and lower-class urbanites. This hypothesis was based on spread of marijuana use to the general population during the 1920s and early 1930s, the presence of bigotry against the Mexicans, and the willingness of Mexicans to underbid whites in labor markets during the Great Depression.

It is evident that bigotry likely played an important role in the demand for prohibition. The Chinese, Germans, and Irish are prominent examples of discrimination through prohibition. From the evidence presented by Richard J. Bonnie and Charles Whitebread II (1974), it is clear that there was little widespread public concern with marijuana use in 1937, nor was there a public outcry for marijuana prohibition that was not linked in some way with the bureau or its publications.

The passage of the Marijuana Tax Act occurred without much publicity and did not become a significant policy until the recreational use of marijuana increased during the 1960s. The Anslinger hypothesis and the Mexican hypothesis are complementary; together they improve our understanding of the causes, justifications, and purposes of marijuana prohibition. At the same time, these two explanations appear to be incomplete answers to the question of the origins of marijuana prohibition. A more complete explanation may be achieved by placing the two competing hypotheses in historical context, with reference to the preceding prohibitions.

First, Anslinger was a commissioner of Prohibition during the National Alcohol Prohibition. When Prohibition was repealed, the Great Depression was already creating budgetary pressure, and the Federal Narcotics Bureau required additional justification for its existence.

Anslinger had learned important lessons during Prohibition. First, bureaucracies that have difficulty in securing enough money to enforce their mission, are eventually exposed as ineffective. Second, Anslinger promoted the idea of punishing the consumer, as well as producers and distributors. He believed that Prohibition would have been effective had such penalties existed. Marijuana prohibition provided him with the opportunity to test his approach. Third, Anslinger was convinced that publicity and public support were crucial and that any means should be used to achieve this support.

In the Anslinger model of prohibition, a substantial majority should be pitted against a small and mistrusted minority. This would provide a stable level of public support and therefore continual funding for the bureaucracy. The federal bureaucracy should not be responsible for the actual enforcement of prohibition. Its role should be restricted to setting policy and to creating public support for the prohibition. With enforcement concentrated at the local level, problems and failures of enforcement would be less noticeable than at the national level.

Alcohol prohibition affected the market for marijuana. As the price of alcohol products increased during Prohibition, the relative price of marijuana fell and its consumption began to rise. It proved to be particularly popular with the lower-income classes who could not afford the high price of alcohol. Marijuana use spread more quickly in the Southwest and Midwest. It was also available in hashish form in several big-city speakeasies. Without the exposure that Prohibition provided, marijuana would likely have not become a matter of public concern or national legislation by 1937. In addition, the Harrison Narcotics Act of 1914 proved to be valuable for the bureau. Before the Harrison act, it was difficult for prohibition legislation to remain within constitutional guidelines. The precedent of using federal taxation powers and the experience of past court challenges to the Harrison act helped to establish the legality of marijuana prohibition.

This historical-theoretical perspective on the origins of marijuana prohibition achieves a comprehensive explanation that incorporates both the Anslinger and Mexican hypotheses. The Mexican (discrimination) hypothesis is valid in part. Most prohibitions involve an element of bigotry, and discrimination helps explain, for example, the decrease in penalties for marijuana during the 1970s, when middle-class white teenagers were arrested in large numbers for marijuana possession. The Anslinger (bureaucratic) hypothesis also helps explain the expansion of prohibition to marijuana and the manner in which it was executed. The historical and empirical implications of the two preceding prohibitions, however, are necessary to provide a consistent and complete account of the origins of marijuana prohibition.

The more traditional, rent-seeking explanation also contributes to our understanding of marijuana prohibition. Marijuana (hemp) has been one of the most important crops in human civilization. It was used extensively as a fiber, animal feed, medicine, oil, and in other ways throughout the world. By the twentieth century, substitutes such as petroleum and cotton had largely replaced hemp as the number-one source of these materials. Nevertheless, eliminating hemp as a substitute would be consistent with rent-seeking activity.

For example, the chemical industry and companies such as E. I. du Pont de Nemours that produced artificial fibers and petroleumbased drying oils (used in paints and shellac) would potentially benefit from the prohibition of marijuana. A prohibition against marijuana would provide chemical-based production and alternative natural sources of oils and fibers with an economic advantage. Despite the du Pont family’s active involvement against alcohol prohibition, their company held a new patent on a process for wood pulp paper which would have had to compete against hemp-based paper had marijuana not been prohibited in 1937. See also Larry Sloman (1979) on the historical background of the marijuana issue.

Prohibition is a strange phenomenon, but no longer a mysterious one. Its origins can be found in the good intentions of evangelical Protestants and the discrimination against minority groups.13 Politics offered the impatient members of the temperance movement a more direct and less costly method of achieving their goals—resulting in the loss of its voluntary and public-service nature.

Prohibitionism became an opportunistic special-interest movement joined in the public forum by a coalition of commercial-interest groups and professional organizations. While traditional rent seeking has been played down as an explanation for prohibitions, it was doubtless an important factor. Among the lasting effects of prohibitionism is the establishment of powerful medical interest groups. The American Medical Association became the dominating force during the drive for prohibition. Their monopoly power allowed them to close medical schools, control the remaining schools, and limit new entry. A major segment of doctors (homeopaths who used less expensive means of treatment) were shut out of the industry. Rubin A. Kessel (1958, 1970, 1972, 1974) describes some of the negative consequences that have resulted from the establishment of this monopoly. Burrow (1977) and John B. Blake (1970) also show that the medical and pharmaceutical organization gained control over the medical industry through licensing requirements and control over drug dispensing during the drive for prohibition. The organization, or monopolization of medicine has had important ramifications for health, innovation, price competition, and income distribution.

One of the most important conclusions of this study is that prohibitions were not enacted on previously unregulated products but on products that had already been subjected to massive government intervention. The worst problems with alcohol, such as those associated with inns and saloons, or in the case of narcotics, patent medicines, were actually the unintended consequences of interventionist measures, not the free market.

It was found that bureaucracies, once established, promoted and extended the policy of prohibition. This was especially true with narcotics prohibition and the prohibition of marijuana. Wars (Revolutionary, 1812, Civil, Spanish-American, and particularly World War I) were also shown to encourage the consumption of alcohol and narcotics and to play a major role in the establishment of prohibitions.

 

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14This prohibition benefited fur traders willing to circumvent it, which might explain its existence.

15Military service, particularly in the Revolutionary War, increased individuals’ desire to drink and exposed soldiers to strong drink and raucous behavior.

16See Hampel 1982, chaps. 6–9.

17Minimum-purchase restrictions required that a person buy at least a certain (large) quantity of spirits, such as fifteen gallons. The requirements were designed to discourage spirit consumption among the low- and middle-income classes.

18See Blocker 1976, 44–47.

19Professional organizations will be discussed at greater length later. Professional medical organizations were an important component in the drive for drug and alcohol prohibitions. For example, in 1914 a group of psychiatrists and neurologists condemned alcohol as a “definite poison” and urged state legislatures to ban its use. In 1915 whiskey and brandy were removed from the United States Pharmacopoeia as a medicinal drug. In 1918 the American Medical Association (AMA) unanimously passed a resolution which called for an end of the use of alcohol as a beverage and urged that its use as a therapeutic agent be further discouraged. At that same convention of the AMA, its president, Dr. Charles H. Mayo, expressed support for a national prohibition on the use of alcohol (Timberlake 1963, 47).

20A survey of these scientific studies is provided by Timberlake (1963, 39–47). The weight of these studies helped prompt the AMA to take a strong stand against alcohol and to favor prohibition.

21Timberlake (1963, 118) provides a long list of services supplied by various saloons, including free food, card tables, exercise rooms, pool tables, and reading materials. The saloon was also the center of political life. “In short, [the saloon] was the poor man’s, and hence the immigrant’s, club par excellence.”

22The only support for the alcohol industry came from its bankers, and its own labor unions. Other industrial leaders supported Prohibition for either moral, economic, or self-interested reasons. Very little was made of the “rights” of the alcohol industry.

23It is widely acknowledged that many religions oppose alcohol and alcohol sales on Sundays because alcohol competes for the attention and money of church members.

24Estimates of the amount of narcotic addiction vary widely, but most early estimates put the population at 0.5 percent or less of the total population. See Courtwright (1982, 9–34) for an in-depth discussion and review of the evidence.

25At this time the general substitutability of intoxicants was again recognized. Dr. Hamilton Wright, the father of American narcotics laws, noted that in Prohibition states, opiate use had increased by 150 percent (Musto 1987, chap. 1, n. 42). Further, the decrease in opiate-based patent medicines (25–50%) might have been responsible for the notable increase in per-capita consumption of alcohol.

26Many of the progressive thinkers of the time were racists in the sense that they viewed the white race as superior and dominant and therefore responsible for the welfare of inferior races. Also see Warburton 1934 on the role of the Progressive thinkers.

• 1See Friedman 1989.
• 2Ekelund and Tollison’s conclusions are based in part on Thornton 1986, an earlier version of chapter 4 of this book.
• 3Postmillennial pietists believe that there will be a thousand-year kingdom of God on earth and that it is man’s responsibility to establish the necessary conditions as a prerequisite for Jesus’ return.
• 4In a sobering passage, Newcomb (1886, 11–13) used the drinking of alcohol (i.e., “gratifying the morbid appetite”) to distinguish correctly between the sphere of moralists and the role of political economists—to separate “the totally different . . . questions whether an end is good and how an end can best be attained.” Newcomb suggests that the “economist might say in conclusion” that he knows “of no way in which a man can be made to accept that which he desires less in preference to that which he desires more, except positive restraint.”
• 5Boswell 1934, 48; also see Fox 1967, 104–5. Most American economists of this time took a dim view of alcohol use. It is interesting to note that Veblen built his concept of “conspicuous consumption” partly on the basis of goods such as alcohol, tobacco, and narcotics.
• 6Fisher’s main contributions to the study of Prohibition include those published in [1926] 1927, and 1930. A biography of Fisher by his son, Irving Norton Fisher (1956), details Fisher’s activist approach to social problems.
• 7The attention received for this distinction is described in Fisher’s biography (I. N. Fisher 1956, 48–50). Edgeworth’s review of Fisher’s dissertation appeared in the March 1893 issue of Economic Journal.
• 8For further illustration of Irving Fisher as a technocratic-type socialist, see his presidential address to the American Economic Association in 1919.
• 9Fisher himself considered the adoption of the Prohibition Amendment a premature act. He felt that more time was needed to establish a national consensus and to provide for education and policy development. Fisher often praised the indirect benefits of World War I, such as the collection of statistics by the federal government, the passage of Prohibition, the opportunity to study inflation, and the powerful jobs made available to economists. See I. N. Fisher 1956, 154; I. Fisher 1918 and 1919; and Rothbard 1989, 115.
• 10By 1933 Fisher must have been thoroughly disheartened with the course of events. A new age of prohibition and scientific management of the economy—a permanent prosperity—had come crashing down around him. Not only had Prohibition been repealed and the economy devastated by the Great Depression, he had lost his personal fortune on his own advice in the stock market. With respect to alcohol he turned his attention to the temperance movement by publishing three editions of a book on the evils of alcohol consumption.
• 11A search of the Index of Economic Journals showed Herman Feldman’s contributions were limited to two review articles and four monographs on labor policy.
• 12A Boston rubber company which employed almost 10,000 workers reported that company nurses made 30,000 visits in 1925 but could not state with any certainty that alcohol was the cause in more than six cases (Feldman 1930, 203).
• 13It is particularly interesting that Warburton was chosen to produce the entry on Prohibition, as Irving Fisher was one of the editors of the Encyclopedia.
• 14In recent years economists have led the fight to legalize—actually, to relegalize—drugs. The Nobel Prize-winning economist Milton Friedman has been the outspoken leader of the relegalization forces. His open letter to “Drug Czar” William Bennett, published in the Wall Street Journal, is just his latest salvo against the prohibitionist establishment. Friedman began this battle in the 1960s, writing in Newsweek that the prohibition of drugs was ineffective and that more reasonable and prudent approaches to the problems of drug abuse were available. He (with his wife, Rose Friedman) later attacked drug prohibition in Free to Choose and The Tyranny of the Status Quo, linking the harm it causes with the experience of alcohol prohibition in the 1920s. The Friedmans are careful observers of history who oppose drug prohibition both on ethical and practical grounds.
• 15The growing importance of and interest in prohibition has led some economists to include discussions of laws against alcohol, drugs, gambling, and pornography in their textbooks. Normally restrained and politically neutral, several writers of economic text books have taken a skeptical view of all prohibitions. For example, when examining the current drug prohibition, Edwin G. Dolan and John C. Goodman (1989, 35) present “misgivings raised on grounds of efficiency, equality, and liberty.” Robert B. Ekelund and Robert D. Tollison (1988, 108) find that “(e)conomic analysis casts doubts on the effects of directing increased resources into enforcement without careful analysis of the probable consequences of such programs,” and they suggest “that government expenditures would be better directed to the demand side of the problem.”
• 16Many of the founding members were raised in puritanical households of postmillennialist pietism. During their days as university students many became atheists, substituting a secular approach to perfectionism for the religious approach of their parents. Some, such as Richard T. Ely, adopted a prosocialist orientation, while others, such as John Bates Clark, adopted a “dog-eat-dog” evolutionary perspective on capitalism. What they shared was an evangelical outlook and a strong dislike of such products as alcohol.
• 17Many of the founding members were raised in puritanical households of postmillennialist pietism. During their days as university students many became atheists, substituting a secular approach to perfectionism for the religious approach of their parents. Some, such as Richard T. Ely, adopted a prosocialist orientation, while others, such as John Bates Clark, adopted a “dog-eat-dog” evolutionary perspective on capitalism. What they shared was an evangelical outlook and a strong dislike of such products as alcohol.
• 18On this argument, Patten formed the economic rationale for prohibition and helped set the alcohol agenda of American economists. Like William Graham Sumner and John Bates Clark, he perceived that survival of the fittest would eventually eliminate the drunkard from society. The interventionist bias in his education, however, propelled Patten to conclude that prohibition combined with evolutionary competition would achieve the desired results (total abstinence) much quicker than evolution alone.
• 19Fisher’s staunch support of Prohibition helped to insulate the policy from criticism. He wrote three books on Prohibition in which his academic status and objectivity thinly cloaked his avid support. He promoted the claims that Prohibition would reduce crime, improve the moral fabric of society, and increase productivity and the standard of living. Indeed, he maintained that Prohibition was partly responsible for the economic prosperity of the Roaring Twenties.
• 20The thesis was applauded by Francis Yisdro Edgeworth, who repudiated aspects of his own theory after reading Fisher’s work. Vilfredo Pareto wrote Fisher an eight-page letter in which he spoke scornfully of the “adversaries of mathematical methods,” and praised Fisher’s distinction between utility of “that which cannot be useful, and that which is really useful.” It was this distinction that Fisher used later in the analysis of alcohol consumption.
• 21To admirers of Fisher’s more scientific contributions, he appears eminently scientific and objective. His work on Prohibition reveals a thin layer of scientific veneer that is important for evaluating all his contributions, for Fisher was clearly an advocate of government intervention in the economy. A key insight into his viewpoint is illustrated by an excerpt from his speech to the Yale Socialist Club in November 1941.
• 22During World War I, Fisher volunteered his services to the Council on National Defense, where he was assigned the task of establishing wartime policy on alcohol. Under his direction the council recommended wartime prohibition and dry zones around all army cantonments. The alcohol interests blocked the first measure, which Fisher supported because he considered the war an excellent opportunity to experiment with prohibition. Fisher also surmised that this defeat provided the necessary impetus to bring about prohibition in 1920.
• 23In his final contribution on Prohibition (1930), Fisher uncharacteristically compromised with the wets by supporting the “right” to home production and consumption. He claimed that legalizing home production would reduce the requirements on law enforcement and eliminate the personal-liberty argument from the public debate. It is unclear whether Fisher used this as a last-ditch effort to save Prohibition or if he realized its futility. He admitted that such a modification would decrease the number of opponents of Prohibition by “thousands, if not millions” and would allow law enforcement to concentrate on bootleggers without compromising the closure of saloons. He also made one statement admitting the infeasibility of prohibition: “Yet, it is absurd to expect home production to be prevented by enforcement officers” (1930, 454). Both the admission of the infeasibility and the compromise are unique statements from Fisher, and they appear only on the last page of his last book on Prohibition.
• 24In Prohibition: Its Economic and Industrial Aspects (1930) Herman Feldman, an otherwise undistinguished economist, published an important contribution to the statistical investigation of the “economic” aspects of Prohibition. His book is based on twenty articles written for the Christian Science Monitor, and the statistical information derives from a detailed survey. The book is most impressive in its caution concerning the use of survey data, statistical analysis, and the conclusions made throughout the book.
• 25Feldman was also known for his survey of absenteeism. He surveyed industrialists concerning the absence or tardiness of workers on Mondays and the days following paydays. The survey asked whether the respondents felt Prohibition was the cause of any noticeable reduction in absenteeism. Information on the relationship between alcohol consumption and absenteeism prior to Prohibition was not available. Of the 287 responses to Feldman’s survey, less than half felt that there was considerable improvement in absenteeism. One-third of the respondents who did detect decreased absenteeism failed to attribute this improvement to Prohibition. Some employers even reported higher absenteeism and attributed the increase to Prohibition. One employer noted that “the stuff available to labor, and there is plenty of it, is so rotten that it takes the drinking man two or three days to get over his spree” (Feldman 1930, 211).
• 26By far the most thorough study of Prohibition was by Clark Warburton. His two main contributions were The Economic Results of Prohibition (1932) and his entry on Prohibition in the Encyclopedia of the Social Sciences (1934). Warburton’s book was initiated at the request of the Association against the Prohibition Amendment, from which he received financial support during the early stages of his investigation.