We all know the story of Prohibition. As H.L. Mencken said:
Five years of Prohibition have had, at least, this one benign effect: they have completely disposed of all the favorite arguments of the Prohibitionists. None of the great boons and usufructs that were to follow the passage of the Eighteenth Amendment has come to pass. There is not less drunkenness in the Republic, but more. There is not less crime, but more. There is not less insanity, but more. The cost of government is not smaller, but vastly greater. Respect for law has not increased, but diminished.
The usual narrative is that our government realized the error of their ways, and chose to end Prohibition because it was more damaging than the alcohol itself. As a proponent of the end of drug prohibition, I had hoped that educating people about the fact that drug prohibition is a cure worse than the disease would be a way to someday end the War on Drugs.
But there’s another narrative, and it tugs at all the cynical bits of my brain:
But contrary to popular belief, the 1920s witnessed virtually no sympathy for ending Prohibition. Neither citizens nor politicians concluded from the obvious failure of Prohibition that it should end.
As historian Norman Clark reports:
“Before 1930 few people called for outright repeal of the (18th) Amendment. No amendment had ever been repealed, and it was clear that few Americans were moved to political action yet by the partial successes or failures of the Eighteenth. … The repeal movement, which since the early 1920s had been a sullen and hopeless expression of minority discontent, astounded even its most dedicated supporters when it suddenly gained political momentum.”
What happened in 1930 that suddenly gave the repeal movement political muscle? The answer is the Great Depression and the ravages that it inflicted on federal income-tax revenues.
Prior to the creation in 1913 of the national income tax, about a third of Uncle Sam’s annual revenue came from liquor taxes. (The bulk of Uncle Sam’s revenues came from customs duties.) Not so after 1913. Especially after the income tax surprised politicians during World War I with its incredible ability to rake in tax revenue, the importance of liquor taxation fell precipitously.
Despite pleas throughout the 1920s by journalist H.L. Mencken and a tiny handful of other sensible people to end Prohibition, Congress gave no hint that it would repeal this folly. Prohibition appeared to be here to stay — until income-tax revenues nose-dived in the early 1930s.
From 1930 to 1931, income-tax revenues fell by 15 percent.
In 1932 they fell another 37 percent; 1932 income-tax revenues were 46 percent lower than just two years earlier. And by 1933 they were fully 60 percent lower than in 1930.
With no end of the Depression in sight, Washington got anxious for a substitute source of revenue.
That source was liquor sales.
Jouett Shouse, president of the Association Against the Prohibition Amendment, was a powerful figure in the Democratic Party that had just nominated Franklin Roosevelt as its candidate for the White House. Shouse emphasized that ending Prohibition would boost government revenue.
The income tax created Prohibition, and falling income tax revenues due to the Great Depression ended it.
It’s a reminder that for the government, it’s all about money and control. The drug war currently gives them both. Sadly, the coming fiscal disaster in our entitlement spending might be the only way to end the war on drugs. The government needs the money, and with the War on Terror, they’ve already got a great excuse to continue the control.
Hat Tip: Radley Balko