|Policy Analysis No. 157 July 17, 1991
by Mark Thornton
Mark Thornton is the O. P. Alford III Assistant Professor
of Economics at Auburn University.
National prohibition of alcohol (1920-33)--the "noble
experiment"--was undertaken to reduce crime and corruption,
solve social problems, reduce the tax burden created by pris-
ons and poorhouses, and improve health and hygiene in Ameri-
ca. The results of that experiment clearly indicate that it
was a miserable failure on all counts. The evidence affirms
sound economic theory, which predicts that prohibition of
mutually beneficial exchanges is doomed to failure.
The lessons of Prohibition remain important today. They
apply not only to the debate over the war on drugs but also
to the mounting efforts to drastically reduce access to alco-
hol and tobacco and to such issues as censorship and bans on
insider trading, abortion, and gambling.(1)
Although consumption of alcohol fell at the beginning of
Prohibition, it subsequently increased. Alcohol became more
dangerous to consume; crime increased and became "organized";
the court and prison systems were stretched to the breaking
point; and corruption of public officials was rampant. No
measurable gains were made in productivity or reduced absen-
teeism. Prohibition removed a significant source of tax
revenue and greatly increased government spending. It led
many drinkers to switch to opium, marijuana, patent medi-
cines, cocaine, and other dangerous substances that they
would have been unlikely to encounter in the absence of Pro-
Those results are documented from a variety of sources,
most of which, ironically, are the work of supporters of
Prohibition--most economists and social scientists supported
it. Their findings make the case against Prohibition that
The Iron Law of Prohibition
According to its proponents, all the proposed benefits
of Prohibition depended on, or were a function of, reducing
the quantity of alcohol consumed. At first glance, the evi-
dence seems to suggest that the quantity consumed did indeed
decrease. That would be no surprise to an economist: making
a product more difficult to supply will increase its price,
and the quantity consumed will be less than it would have
Evidence of decreased consumption is provided by two
important American economists, Irving Fisher and Clark
Warburton.(3) It should be noted that annual per capita con-
sumption and the percentage of annual per capita income
spent on alcohol had been steadily falling before Prohibi-
tion and that annual spending on alcohol during Prohibition
was greater than it had been before Prohibition.(4)
The decrease in quantity consumed needs at least four
qualifications--qualifications that undermine any value that
a prohibitionist might claim for reduced consumption.
First, the decrease was not very significant. Warburton
found that the quantity of alcohol purchased may have fallen
20 percent between the prewar years 1911-14 and 1927-30.
Prohibition fell far short of eliminating the consumption of
Second, consumption of alcohol actually rose steadily
after an initial drop. Annual per capita consumption had
been declining since 1910, reached an all-time low during
the depression of 1921, and then began to increase in 1922.
Consumption would probably have surpassed pre-Prohibition
levels even if Prohibition had not been repealed in 1933.(6)
Illicit production and distribution continued to expand
throughout Prohibition despite ever-increasing resources
devoted to enforcement.(7) That pattern of consumption, shown
in Figure 1, is to be expected after an entire industry is
banned: new entrepreneurs in the underground economy improve
techniques and expand output, while consumers begin to real-
ize the folly of the ban.
Third, the resources devoted to enforcement of Prohibi-
tion increased along with consumption. Heightened enforce-
ment did not curtail consumption. The annual budget of the
Bureau of Prohibition went from $4.4 million to $13.4 mil-
lion during the 1920s, while Coast Guard spending on Prohi-
bition averaged over $13 million per year.(8) To those
amounts should be added the expenditures of state and local
Per Capita Consumption of Alcoholic Beverages (Gallons of Pure
Source: Clark Warburton, The Economic Results of Prohibition
(New York: Columbia University Press, 1932), pp. 23-26, 72.
The fourth qualification may actually be the most im-
portant: a decrease in the quantity of alcohol consumed did
not make Prohibition a success. Even if we agree that soci-
ety would be better off if less alcohol were consumed, it
does not follow that lessening consumption through Prohibi-
tion made society better off. We must consider the overall
social consequences of Prohibition, not just reduced alcohol
consumption. Prohibition had pervasive (and perverse) ef-
fects on every aspect of alcohol production, distribution,
and consumption. Changing the rules from those of the free
market to those of Prohibition broke the link that prohibi-
tionists had assumed between consumption and social evil.
The rule changes also caused unintended consequences to
enter the equation.
The most notable of those consequences has been labeled
the "Iron Law of Prohibition" by Richard Cowan.(9) That law
states that the more intense the law enforcement, the more
potent the prohibited substance becomes. When drugs or
alcoholic beverages are prohibited, they will become more
potent, will have greater variability in potency, will be
adulterated with unknown or dangerous substances, and will
not be produced and consumed under normal market con-
straints.(10) The Iron Law undermines the prohibitionist case
and reduces or outweighs the benefits ascribed to a decrease
Statistics indicate that for a long time Americans
spent a falling share of income on alcoholic beverages.
They also purchased higher quality brands and weaker types
of alcoholic beverages. Before Prohibition, Americans spent
roughly equal amounts on beer and spirits.(11) However, dur-
ing Prohibition virtually all production, and therefore
consumption, was of distilled spirits and fortified wines.
Beer became relatively more expensive because of its bulk,
and it might have disappeared altogether except for home-
made beer and near beer, which could be converted into real
Figure 2 shows that the underground economy swiftly
moved from the production of beer to the production of the
more potent form of alcohol, spirits.(13) Prohibition made it
more difficult to supply weaker, bulkier products, such as
beer, than stronger, compact products, such as whiskey,
because the largest cost of selling an illegal product is
avoiding detection.(14) Therefore, while all alcohol prices
rose, the price of whiskey rose more slowly than that of
Fisher used retail alcohol prices to demonstrate that
Prohibition was working by raising the price and decreasing
the quantity produced. However, his price quotations also
revealed that the Iron Law of Prohibition was at work. The
price of beer increased by more than 700 percent, and that
of brandies increased by 433 percent, but spirit prices in-
creased by only 270 percent, which led to an absolute in-
crease in the consumption of spirits over pre-Prohibition
A number of observers of Prohibition noted that the
potency of alcoholic products rose. Not only did producers
and consumers switch to stronger alcoholic beverages (from
beer to whiskey), but producers supplied stronger forms of
particular beverages, such as fortified wine. The typical
beer, wine, or whiskey contained a higher percentage of
alcohol by volume during Prohibition than it did before or
after. Fisher, for example, referred to "White Mule Whis-
key," a name that clearly indicates that the product had
quite a kick. Most estimates place the potency of prohibi-
tion-era products at 150+ percent of the potency of products
produced either before or after Prohibition.(16)
Total Expenditure on Distilled Spirts as a Percentage of
Total Alcohol Sales (1890-1960)
Source: Clark Warburton, The Economic Result of Prohibition
(New York: Columbia University Press, 1932), pp. 114-15; and
Licensed Beverage Industry, Facts about the Licensed Beverage
Industry (New York: LBI, 1961), pp. 54-55.
Even Fisher, the preeminent academic supporter of Pro-
hibition, recognized the danger of such products.
I am credibly informed that a very conservative
reckoning would set the poisonous effects of boot-
leg beverages as compared with medicinal liquors
at ten to one; that is, it requires only a tenth
as much bootleg liquor as of pre-prohibition li-
quor to produce a given degree of drunkenness.
The reason, of course, is that bootleg liquor is
so concentrated and almost invariably contains
other and more deadly poisons than mere ethyl
There were few if any production standards during Pro-
hibition, and the potency and quality of products varied
greatly, making it difficult to predict their effect. The
production of moonshine during Prohibition was undertaken by
an army of amateurs and often resulted in products that
could harm or kill the consumer. Those products were also
likely to contain dangerous adulterants, a government re-
quirement for industrial alcohol.
According to Thomas Coffey, "the death rate from poi-
soned liquor was appallingly high throughout the country.
In 1925 the national toll was 4,154 as compared to 1,064 in
1920. And the increasing number of deaths created a public
relations problem for . . . the drys because they weren't
exactly accidental."(18) Will Rogers remarked that "govern-
ments used to murder by the bullet only. Now it's by the
Patterns of consumption changed during Prohibition.
It could be argued that Prohibition increased the demand for
alcohol among three groups. It heightened the attractive-
ness of alcohol to the young by making it a glamour product
associated with excitement and intrigue. The high prices
and profits during Prohibition enticed sellers to try to
market their products to nondrinkers--undoubtedly, with some
success. Finally, many old-stock Americans and recent immi-
grants were unwilling to be told that they could not drink.
According to Lee, "Men were drinking defiantly, with a sense
of high purpose, a kind of dedicated drinking that you don't
see much of today."(19)
Prohibition may actually have increased drinking and
intemperance by increasing the availability of alcohol. One
New Jersey businessman claimed that there were 10 times more
places one could get a drink during Prohibition than there
had been before.(20) It is not surprising that, given their
hidden locations and small size, speakeasies outnumbered
saloons. Lee found that there were twice as many speak-
easies in Rochester, New York, as saloons closed by Prohibi-
tion. That was more or less true throughout the country.
Another setback for prohibitionists was their loss of
control over the location of drinking establishments. Until
Prohibition, prohibitionists had used local ordinances,
taxes, licensing laws and regulations, and local-option laws
to prevent or discourage the sale of alcohol in the center
city, near churches and schools, on Sundays and election
days, and in their neighborhoods. Prohibition eliminated
those political tools and led to the establishment of speak-
easies in business districts, middle-class neighborhoods,
and other locations that were formerly dry, or gave the ap-
pearance of being dry.
Prohibition also led many people to drink more "legiti-
mate" alcohol, such as patent medicines (which contained
high concentrations of alcohol), medicinal alcohol, and
sacramental alcohol.(21) The amount of alcoholic liquors sold
by physicians and hospitals doubled between 1923 and 1931.
The amount of medicinal alcohol (95 percent pure alcohol)
sold increased by 400 percent during the same time.(22) Those
increases occurred despite rigorous new regulations.
Prohibitionists wanted and expected people to switch
their spending from alcohol to dairy products, modern appli-
ances, life insurance, savings, and education. That simply
did not happen. Not only did spending on alcohol increase,
so did spending on substitutes for alcohol. In addition to
patent medicines, consumers switched to narcotics, hashish,
tobacco, and marijuana. Those products were potentially
more dangerous and addictive than alcohol, and procuring
them often brought users into contact with a more dangerous,
The harmful results of the Iron Law of Prohibition more
than offset any benefits of decreasing consumption, which
had been anticipated but did not occur.
Prohibition Was Not a Healthy Move
One of the few bright spots for which the prohibition-
ists can present some supporting evidence is the decline in
"alcohol-related deaths" during Prohibition. On closer
examination, however, that success is an illusion. Prohibi-
tion did not improve health and hygiene in America as an-
Cirrhosis of the liver has been found to pose a signif-
icant health risk, particularly in women who consume more
than four drinks per day.(24) However, deaths due to cirrho-
sis and alcoholism are a small portion of the total number
of deaths each year, and alcohol can be considered only a
contributing cause of most of those deaths.(25) Many people
who do not drink develop cirrhosis, and the vast majority of
heavy drinkers never develop it.(26) Dr. Snell of the Mayo
Clinic in Rochester, Minnesota, reported in 1931 that "we
know now that cirrhosis occurs in only 4 per cent of alco-
holic individuals."(27) Even in the worst pre-Prohibition
year, recorded deaths due to alcoholism and cirrhosis of the
liver amounted to less than 1.5 percent of total deaths.
An examination of death rates does reveal a dramatic
drop in deaths due to alcoholism and cirrhosis, but the drop
occurred during World War I, before enforcement of Prohibi-
tion.(28) The death rate from alcoholism bottomed out just
before the enforcement of Prohibition and then returned to
pre-World War I levels.(29) That was probably the result of
increased consumption during Prohibition and the consumption
of more potent and poisonous alcoholic beverages. The death
rate from alcoholism and cirrhosis also declined rather dra-
matically in Denmark, Ireland, and Great Britain during
World War I, but rates in those countries continued to fall
during the 1920s (in the absence of prohibition) when rates
in the United States were either rising or stable.(30)
Prohibitionists such as Irving Fisher lamented that the
drunkards must be forgotten in order to concentrate the
benefits of Prohibition on the young. Prevent the young
from drinking and let the older alcoholic generations die
out. However, if that had happened, we could expect the
average age of people dying from alcoholism and cirrhosis to
have increased. But the average age of people dying from
alcoholism fell by six months between 1916 and 1923, a per-
iod of otherwise general improvement in the health of young
There appear to have been no health benefits from Pro-
hibition.(32) On the contrary, the harmlessness and even
health benefits of consumption of a moderate amount of alco-
hol have been long established. As early as 1927 Clarence
Darrow and Victor Yarros could cite several studies showing
that moderate drinking does not shorten life or seriously
affect health and that in general it may be beneficial.(33)
According to the eminent Harvard psychologist Hugo MÅnster-
berg, "there exists no scientifically sound fact which dem-
onstrates evil effects from a temperate use of alcohol by
normal adult men."(34)
Studies continue to find the same results and that
problems with alcohol are associated with excess--a problem
with most goods.(35) Gene Ford cites 17 recent studies that
provide evidence of the benefits to the heart and cardiovas-
cular system of moderate drinking.(36) The evidence appears
so strong that the American Heart Association has conceded
that "modest alcohol consumption has been associated with
beneficial effects," and that "an increased HDL-cholesterol
[the good kind] level appears to be a dividend of moderate
consumption of alcohol."(37)
Not all prohibitionists were blind to the potential
benefits of alcohol. However, many were technocrats or Pro-
gressives, and if some benefit of alcohol were admitted they
would have been forced to conclude that the government
should act to encourage moderate consumption of alcohol.
One technocrat-economist, Thomas Carver, was familiar with
the "possibility" that moderate drinking could be benefi-
cial,(38) but according to Fisher, he was "a courageous
scholar" and discarded that possibility to pursue the unde-
niable benefits of Prohibition.
Prohibition Was Criminal
At the beginning of Prohibition, the Reverend Billy
Sunday stirred audiences with this optimistic prediction:
The reign of tears is over. The slums will soon
be a memory. We will turn our prisons into facto-
ries and our jails into storehouses and corncribs.
Men will walk upright now, women will smile and
children will laugh. Hell will be forever for
Sunday's expectations of Prohibition were never real-
ized. He and other champions of Prohibition expected it to
reduce crime and solve a host of social problems by elimi-
nating the Demon Rum. Early temperance reformers claimed
that alcohol was responsible for everything from disease to
broken homes. High on their list of evils were the crime
and poverty associated with intemperance. They felt that
the burden of taxes could be reduced if prisons and poor-
houses could be emptied by abstinence. That perspective was
largely based on interviews of inmates of prisons and poor-
houses who claimed that their crimes and poverty were the
result of alcohol.(40) Social "scientists" later used those
correlations as propaganda "to persuade many people to turn
to saloon suppression and prohibition."(41)
America had experienced a gradual decline in the rate
of serious crimes over much of the 19th and early 20th cen-
turies. That trend was unintentionally reversed by the
efforts of the Prohibition movement. The homicide rate in
large cities increased from 5.6 per 100,000 population dur-
ing the first decade of the century to 8.4 during the second
decade when the Harrison Narcotics Act, a wave of state
alcohol prohibitions, and World War I alcohol restrictions
were enacted. The homicide rate increased to 10 per 100,000
population during the 1920s, a 78 percent increase over the
The Volstead Act, passed to enforce the Eighteenth
Amendment, had an immediate impact on crime. According to a
study of 30 major U.S. cities, the number of crimes
increased 24 percent between 1920 and 1921. The study re-
vealed that during that period more money was spent on po-
lice (11.4+ percent) and more people were arrested for
violating Prohibition laws (102+ percent). But increased
law enforcement efforts did not appear to reduce drinking:
arrests for drunkenness and disorderly conduct increased 41
percent, and arrests of drunken drivers increased 81 per-
cent. Among crimes with victims, thefts and burglaries
increased 9 percent, while homicides and incidents of as-
sault and battery increased 13 percent.(42) More crimes were
committed because prohibition destroys legal jobs, creates
black-market violence, diverts resources from enforcement of
other laws, and greatly increases the prices people have to
pay for the prohibited goods.
Instead of emptying the prisons as its supporters had
hoped it would, Prohibition quickly filled the prisons to
capacity. Those convicted of additional crimes with victims
(burglaries, robberies, and murders), which were due to Pro-
hibition and the black market, were incarcerated largely in
city and county jails and state prisons. According to
Towne, "The Sing Sing prison deported no less than sixty
prisoners to Auburn in May 1922 because of overcrowding."
Figure 3 shows the tremendous increase in the prison popula-
tion at Sing Sing in the early years of Prohibition.(43)
Inmates at Sing Sing Prison: 1917-22
Source: Charles Hanson Towne, The Rise and Fall of Prohibi-
tion (New York: Macmillan, 1923) p. 162.
Before Prohibition and the Harrison Narcotics Act
(1914), there had been 4,000 federal convicts, fewer than
3,000 of whom were housed in federal prisons. By 1932 the
number of federal convicts had increased 561 percent, to
26,589, and the federal prison population had increased 366
percent.(44) Much of the increase was due to violations of
the Volstead Act and other Prohibition laws. The number of
people convicted of Prohibition violations increased 1,000
percent between 1925 and 1930, and fully half of all prison-
ers received in 1930 had been convicted of such violations.
Two-thirds of all prisoners received in 1930 had been con-
victed of alcohol and drug offenses, and that figure rises
to 75 percent of violators if other commercial prohibitions
The explosion in the prison population greatly in-
creased spending on prisons and led to severe overcrowding.
Total federal expenditures on penal institutions increased
more than 1,000 percent between 1915 and 1932. Despite
those expenditures and new prison space, prisons were se-
verely overcrowded. In 1929 the normal capacity of Atlanta
Penitentiary and Leavenworth Prison was approximately 1,500
each, but their actual population exceeded 3,700 each.(46)
To some the crime wave of the 1920s remained a mere
"state of mind" due mostly to media hype. For example, Dr.
Fabian Franklin noted that according to one measure, crime
had decreased 37.7 percent between 1910 and 1923. However,
the apparent contradiction between the media hype and Frank-
lin's declining crime statistic is resolved by the realiza-
tion that violent and serious crime had increased (hence the
media hype), while less serious crime had decreased. For
example, theft of property increased 13.2 percent, homicide
increased 16.1 percent, and robbery rose 83.3 percent
between 1910 and 1923, while minor crimes (which were large
in number) such as vagrancy, malicious mischief, and public
swearing decreased over 50 percent.(47) Even Franklin had to
admit that the increased homicides may have been related to
the "illegal traffic."
The number of violations of Prohibition laws and vio-
lent crimes against persons and property continued to in-
crease throughout Prohibition. Figure 4 shows an undeniable
relationship between Prohibition and an increase in the
homicide rate. The homicide rate increased from 6 per
100,000 population in the pre-Prohibition period to nearly
10 per 100,000 in 1933. That rising trend was reversed by
the repeal of Prohibition in 1933, and the rate continued to
decline throughout the 1930s and early 1940s.(48)
Homicide Rate: 1910-44
Source: U.S. Bureau of the Census, Historical Statistics of
the United States, Colonial Times to 1970 (Washington: Govern-
ment Printing Office, 1975), part 1, p. 414.
Not only did the number of serious crimes increase, but
crime became organized. Criminal groups organize around the
steady source of income provided by laws against victimless
crimes such as consuming alcohol or drugs, gambling, and
prostitution. In the process of providing goods and serv-
ices, those criminal organizations resort to real crimes in
defense of sales territories, brand names, and labor con-
tracts. That is true of extensive crime syndicates (the
Mafia) as well as street gangs, a criminal element that
first surfaced during Prohibition.(49)
The most telling sign of the relationship between seri-
ous crime and Prohibition was the dramatic reversal in the
rates for robbery, burglary, murder, and assault when Prohi-
bition was repealed in 1933. That dramatic reversal has
Marxist and business-cycle crime theorists puzzled to this
day. For example, sociologist John Pandiani noted that "a
major wave of crime appears to have begun as early as the
mid 1920s [and] increased continually until 1933 . . . when
it mysteriously reversed itself."(50) Theodore Ferdinand
also found a "mysterious" decline that began in 1933 and
lasted throughout the 1930s.(51) How could they miss the
significance of the fact that the crime rate dropped in 1933?
Prohibition Caused Corruption
It was hoped that Prohibition would eliminate corrupt-
ing influences in society; instead, Prohibition itself be-
came a major source of corruption. Everyone from major
politicians to the cop on the beat took bribes from bootleg-
gers, moonshiners, crime bosses, and owners of speakeasies.
The Bureau of Prohibition was particularly susceptible and
had to be reorganized to reduce corruption. According to
Assistant Secretary of the Treasury Lincoln C. Andrews,
"conspiracies are nation wide in extent, in great numbers,
organized, well-financed, and cleverly conducted."(52) De-
spite additional resources and reorganization, corruption
continued within the bureau. Commissioner of Prohibition
Henry Anderson concluded that "the fruitless efforts at
enforcement are creating public disregard not only for this
law but for all laws. Public corruption through the pur-
chase of official protection for this illegal traffic is
widespread and notorious. The courts are cluttered with
prohibition cases to an extent which seriously affects the
entire administration of justice."(53)
Prohibition not only created the Bureau of Prohibition,
it gave rise to a dramatic increase in the size and power of
other government agencies as well. Between 1920 and 1930
employment at the Customs Service increased 45 percent, and
the service's annual budget increased 123 percent. Person-
nel of the Coast Guard increased 188 percent during the
1920s, and its budget increased more than 500 percent be-
tween 1915 and 1932. Those increases were primarily due to
the Coast Guard's and the Customs Service's role in enforc-
Conclusion: Lessons for Today
Prohibition, which failed to improve health and virtue
in America, can afford some invaluable lessons. First, it
can provide some perspective on the current crisis in drug
prohibition--a 75-year effort that is increasingly viewed as
Repeal of Prohibition dramatically reduced crime, in-
cluding organized crime, and corruption. Jobs were created,
and new voluntary efforts, such as Alcoholics Anonymous,
which was begun in 1934, succeeded in helping alcoholics.
Those lessons can be applied to the current crisis in drug
prohibition and the problems of drug abuse. Second, the
lessons of Prohibition should be used to curb the urge to
prohibit. Neoprohibition of alcohol and prohibition of to-
bacco would result in more crime, corruption, and dangerous
products and increased government control over the average
citizen's life. Finally, Prohibition provides a general
lesson that society can no more be successfully engineered
in the United States than in the Soviet Union.
Prohibition was supposed to be an economic and moral
bonanza. Prisons and poorhouses were to be emptied, taxes
cut, and social problems eliminated. Productivity was to
skyrocket and absenteeism disappear. The economy was to
enter a never-ending boom. That utopian outlook was shat-
tered by the stock market crash of 1929. Prohibition did
not improve productivity or reduce absenteeism.(55) In con-
trast, private regulation of employees' drinking improved
productivity, reduced absenteeism, and reduced industrial
accidents wherever it was tried before, during, and after
In summary, Prohibition did not achieve its goals.
Instead, it added to the problems it was intended to solve
and supplanted other ways of addressing problems. The only
beneficiaries of Prohibition were bootleggers, crime bosses,
and the forces of big government. Carroll Wooddy concluded
that the "Eighteenth Amendment . . . contributed substan-
tially to the growth of government and of government costs
in this period [1915-32]."(57)
In the aftermath of Prohibition, economist Ludwig von
Mises wrote, "Once the principle is admitted that it is the
duty of government to protect the individual against his own
foolishness, no serious objections can be advanced against
further encroachments."(58) The repeal of all prohibition of
voluntary exchange is as important to the restoration of
liberty now as its enactment was to the cause of big govern-
ment in the Progressive Era.
(1) The "Koop doctrine," for example, calls for a smoke-free
America by the year 2000. For a description of the anti-
alcohol movement, see Jacob Sullum, "Invasion of the Bottle
Snatchers," Reason 21, no. 9 (February 1990): 26-32. For a
description of that movement's subversive measures against
alcohol, see recent issues of Moderation Reader, which is
published by Citizens for Moderation, Seattle, Washington.
The federal bureaucracies charged with reducing access
to purportedly harmful substances will resort to almost any
means to achieve their goal. One example of their propa-
ganda campaign is the recent report on smoking in America,
dubbed the "Sullivan Report," that claims that 390,000
deaths per year are caused by smoking. That figure is very
misleading. The estimate is based on a faulty sample and
methodology; the deaths do not represent "named, individual
persons"; and most of those "deaths" are of people over 65
years of age. For a critique of Sullivan's estimate of the
number of deaths and the "cost" of smoking, see Richard
Ault, "The Economic Costs of Smoking: A Critique of Conven
tional Wisdom" (Paper presented to the Southern Economic
Association, November 1990). It should also be noted that
prohibition of tobacco products was attempted at the state
level during the 1920s and was a miserable failure. See
Mark Thornton, "The War on Tobacco," Free Market, November
1990, pp. 7-8. For further insight into the character of
bureaucrats, see the sympathetic interview with Secretary of
Health and Human Services Louis Sullivan in the Saturday
Evening Post, September 1990.
(2) See Mark Thornton, The Economics of Prohibition (Salt
Lake City: University of Utah Press, 1991, forthcoming).
(3) Clark Warburton, The Economic Results of Prohibition
(New York: Columbia University Press, 1932); Irving Fisher,
Prohibition at Its Worst (New York: Alcohol Information
Committee, 1927). For a recent estimate of consumption of
alcohol during Prohibition that concurs with earlier esti
mates, see Jeffrey A. Miron and Jeffrey Zwiebel, "Alcohol
Consumption during Prohibition," American Economic Review:
Papers and Proceedings 81, no. 2 (May 1991): 242-47.
(4) See Mark Thornton, "The Economics of Prohibition"
(Ph.D. diss., Auburn University, 1989), pp. 174-80.
(5) Warburton's estimates are the most reliable, although he
felt that he might have underestimated the sales of the most
potent products--spirits. Warburton, pp. 104-8.
(6) According to Warburton, from 1921 to 1929 the apparent
per capita consumption of beer increased 463 percent, that
of wine increased 100 percent, and that of spirits increased
520 percent. While per capita beer consumption in 1929 was
only one-third the 1909 level, per capita consumption of
wine and spirits was above 1909 levels. If that trend had
continued, total per capita consumption of alcohol would
have surpassed pre-Prohibition levels during the mid-1930s.
Warburton, p. 174.
(7) As noted above, Warburton found that production of beer,
wine, and spirits rapidly expanded during the 1920s. It
should be remembered that illegal sources of alcohol were
just organizing in 1920-21 and that large inventories could
still be relied on during those early years.
(8) Bureau of Prohibition, Statistics Concerning Intoxicat
ing Liquors (Washington: Government Printing Office, Decem
ber 1930), p. 2.
(9) Richard Cowan, "How the Narcs Created Crack," National
Review, December 5, 1986, pp. 30-31.
(10) See Mark Thornton, "The Potency of Illegal Drugs," Au
burn University working paper, 1986; and Thornton, The Eco
nomics of Prohibition.
(11) See Thornton, "The Economics of Prohibition," pp. 176-
(12) Alcohol produced for industrial, medical, and ceremonial
purposes, although illegally consumed, could not be elimi
(13) Data from Warburton, pp. 114-15; and Licensed Beverage
Industry, Facts about the Licensed Beverage Industry (New
York: LBI, 1961), pp. 54-55.
(14) The same effect can be seen at most college football
games where alcoholic beverages are prohibited. Football
fans are normally beer drinkers. However, they typically
become brandy, bourbon, and rum smugglers at football games.
It is easier to smuggle any given quantity of alcohol in the
form of more potent beverages.
(15) Fisher, p. 91. His support for Prohibition may have
blinded him to the importance of the change in relative
prices. Certainly others have made a similar mistake, such
as Tun Yuan Hu, The Liquor Tax in the United States: 1791-
1947 (New York: Columbia University Graduate School of Busi
ness, 1947), p. 54, who found it "difficult to agree with
him [Warburton] that prohibition had not curtailed but, on
the contrary, increased the consumption of spirits."
(16) Henry Lee, How Dry We Were (Englewood Cliffs, N.J.:
Prentice-Hall, 1963). Lee refers to 38-proof (100 proof
equals 50 percent ethyl alcohol by volume) beer (p. 76),
which would have been five times the strength of legal beer,
and to 170-proof spirits (p. 202) that were produced on a
large scale and had roughly twice the potency of legal spir
(17) Fisher, pp. 28-29. Fisher was not describing an unfor
tunate consequence of Prohibition; he was trying to explain
"distortions" in the statistics on arrests for drunkenness.
According to Fisher, people were drinking less but getting
(18) Thomas M. Coffey, The Long Thirst: Prohibition in Ameri
ca, 1920-1933 (New York: W.W. Norton & Co., 1975), pp. 196-
(19) Quoted in Lawrence W. Reed, "Would Legalization Increase
Drug Use?" Free Market, February 1990.
(20) Warburton, p. 206.
(21) Clarence Darrow and Victor S. Yarros, The Prohibition
Mania: A Reply to Professor Irving Fisher and Others (New
York: Boni and Liveright, 1927).
(22) Warburton, p. 222.
(23) Physician F. E. Oliver reported in 1872 on several stud
ies that showed that consumption of opiates and other nar
cotics increased dramatically when the price of alcohol rose
or when prohibitions were enforced. The use of narcotics
was also common among the membership of total abstinence
societies. Wayne H. Morgan, Yesterday's Addicts: American
Society and Drug Abuse, 1865-1920 (Norman: University of
Oklahoma Press, 1974), pp. 49-50.
(24) R. Norton, R. Bartez, T. Dwyer, and S. MacMahoney, "Al
cohol Consumption and the Risk of Alcohol-Related Cirrhosis
in Women," British Medical Journal 295 (1987): 80-82.
(25) See, for example, Warburton, p. 73, and Gene Ford,
Drinking and Health (San Francisco: Wine Appreciation Guild,
1990), p. 79.
(26) Wine Institute, Wine and Medical Practice, 10th ed. (San
Francisco: Wine Institute, 1979); cited in Ford, p. 79.
(27) New York Times, March 26, 1931, p. 1.
(28) The death rate due to alcoholism and cirrhosis began to
decrease after 1916, before the wartime restrictions began.
The tax rate on a gallon of distilled spirits increased from
$1.10 to $3.20 in October 1917 and to $6.40 in February
1919. The War Prohibition Act did not become effective
until July 1, 1919. Taking into account massive immigration
and the impact of World War I, the alcohol-related death
rate may have begun to decline much earlier. It should also
be noted that death due to alcoholism and cirrhosis is
thought to be the result of a long, cumulative process;
therefore, the decrease in death rates must, in part, be at
tributed to factors at work before the wartime restrictions
on alcohol and Prohibition.
(29) Warburton, p. 90.
(30) Ibid., pp. 78-90.
(31) Darrow and Yarros, p. 40.
(32) Warburton concludes that "there is thus no statistical
evidence, at least so far as these death rates are con
cerned, that prohibition has had a measurable influence upon
the general public health, either directly or indirectly
through the living standard" (p. 221).
(33) Darrow and Yarros, pp. 139-46.
(34) Hugo Mnsterberg, American Problems from the Point of
View of a Psychologist (1910; Freeport, N.Y.: Books for
Libraries Press, 1969); quoted in Darrow and Yarros, pp.
(35) Gene Ford, The Benefits of Moderate Drinking: Alcohol,
Health and Society (San Francisco: Wine Appreciation Guild,
1988), pp. 18-26. It may be more appropriate in some cases
to say that the problems are with the consumers rather than
with the goods themselves.
(36) Ibid., pp. 27-30.
(37) American Heart Association, "Report of Inter-Society
Commission for Heart Disease Resources," 1984; quoted in
Ford, pp. 30-31.
(38) Thomas Nixon Carver, Government Control of the Liquor
Business in Great Britain and the United States (New York:
Oxford University Press, 1919), chap. 6.
(39) Quoted in Michael Woodiwiss, Crimes, Crusades and Cor-
ruption: Prohibitions in the United States, 1900-1987 (Lon
don: Pinter Publishers, 1988), p. 6.
(40) John A. Krout, The Origins of Prohibition (New York:
Alfred A. Knopf, 1925), pp. 234-35.
(41) James H. Timberlake, Prohibition and the Progressive
Movement: 1900-1920 (Cambridge, Mass.: Harvard University
Press, 1963), p. 60. Timberlake notes that such correla
tions were a key element in turning social science away from
the concept of free will and toward acceptance of environ
(42) Charles Hanson Towne, The Rise and Fall of Prohibition:
The Human Side of What the Eighteenth Amendment Has Done to
the United States (New York: Macmillan, 1923), pp. 156-61.
The 30 cities examined had a total population of more than
10 million. A closer examination of the cities studied
indicates that the greatest increases in crime occurred in
those that were previously wet; the only cities to experi
ence a decline in arrests were already dry when Prohibition
(43) Ibid., p. 162.
(44) Carroll H. Wooddy, The Growth of the Federal Government,
1915-1932 (New York: McGraw-Hill, 1934), p. 95.
(45) Ibid., p. 94.
(46) Ibid., p. 75.
(47) Fisher, pp. 75-80.
(48) Figure 4 is a revised table first suggested by James
Ostrowski, "Thinking about Drug Legalization," Cato Insti
tute Policy Analysis no. 121, May 28, 1989.
(49) Thornton, "The Economics of Prohibition," chap. 5.
(50) John A. Pandiani, "The Crime Control Corps: An Invisible
New Deal Program," British Journal of Sociology 33 (Septem
ber 1982): 348-58.
(51) Theodore N. Ferdinand, "The Criminal Patterns of Boston
since 1849," American Journal of Sociology 73 (1967): 84-99.
(52) U.S. Department of the Treasury, Prohibition Enforcement
(Washington: Government Printing Office, 1927), p. 2.
(53) National Commission on Law Observance and Enforcement,
Enforcement of the Prohibition Laws of the United States
(Washington: Government Printing Office, 1931), p. 90.
(54) Ibid., p. 215. The additional resources greatly ex-
panded the enforcement of Prohibition. The annual number of
liquor seizures by Customs doubled between 1927 and 1931.
(55) Ibid.; Warburton, pp. 203-06.
(56) Thornton, "The Economics of Prohibition," chap. 1.
(57) Ibid.; Wooddy, p. 104.
(58) Ludwig von Mises, Human Action, 3d revised ed. (Chicago:
Henry Regnery, 1966), p. 733.
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