Wednesday, June 13, 2012

"The Great Beer Parade Stimulus of 1932"

From Bloomberg's Echoes blog:
By 1932, Prohibition had obviously failed. But how could the U.S. legally bring back booze? A constitutional amendment had authorized the ban, and only another one could erase it. Luckily, during the Great Depression, anti-Prohibitionists had an economic argument.

Defiant “drys” mocked “wet” schemes to refloat the economy by legalizing beer with low alcohol content and taxing it, which they said would create jobs for craftsmen, bartenders and teamsters, and raise much-needed federal revenue. The jobs claim was bogus, for tens of thousands were working daily, if secretly, to slake the nation’s thirst for suds. But the taxation point had merit.

In 1914, the government collected $68 million in customs and excise tax on beer taxed at $1 a barrel, a rate that rose first to $3 during World War I and then $6 in 1919.

Estimating that Americans illegally consumed more than 2.5 billion gallons of beer in 1930, on which no taxes were collected, the New York Times calculated that almost $500 million in lost revenue could be recovered annually if beer was re-legalized and the federal charge of $6 a barrel was restored. State governments could most likely collect an equal sum.

The challenge was to put a political process in motion toward this end....MORE