Was Prohibition About Drinking or Taxes?

December 2008
by George Vierra
On April 16, 1917, President Woodrow Wilson asked Congress to declare war on Germany. A vital part of Wilson's plan was a food control bill designed to direct vital food materials to aid in the war effort. The Anti-Saloon League and temperance movement that had been agitating against alcohol for decades saw an opportunity. Because hard liquor production required grain, sugar and other items, they used strong patriotic arguments to push legislation against liquor.

After much wrangling, a food bill passed Sept. 17, 1917. It banned hard liquor but did not touch beer or wine. Meanwhile, Anti-Saloon League member Wayne Bidwell Wheeler modified his original draft of a constitutional amendment to further restrict alcoholic beverages and gave it back to his friends in Congress. By Dec. 18, 1917, the 18th Amendment to the Constitution had passed both houses of Congress. Ironically, the final version of the 18th Amendment (officially, the War Prohibition Act) was not passed until 10 days after the armistice ending World War I.

The amendment then went to the states for ratification. It became law Jan. 16, 1919. The temperance movement's long quest was seemingly brought to a triumphant conclusion. But other little-noticed elements were at play.

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

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

A few years later, however, came the crash of 1929 and the start of the Great Depression, which drastically reduced income tax revenue. The anti-alcohol movement soon lost allies. Both President Herbert Hoover and challenger Franklin D. Roosevelt pledged repeal of the 18th Amendment in their 1932 campaigns. A month following Roosevelt's landslide victory, Republican Sen. John Blaine of Wisconsin drafted a resolution calling for the repeal of the 18th Amendment. Congress passed the resolution, and it was sent to the states. With ratification of the 21st Amendment on Dec. 5, 1933--75 years ago this month--the 18th Amendment was repealed. The conclusive proof of Prohibition's failure is, of course, the fact that the 18th Amendment became the only constitutional amendment ever to be repealed.

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

Repeal of the 18th Amendment allowed local, state and federal government to reinstate alcohol taxes. State and local governments also gained additional revenue via licensing fees and other alcohol related charges. Federal alcohol taxes freed aid to state and city governments in the form of grants, public works and other assistance. These revenue flows permitted property tax cuts and other tax reductions. Repeal also reduced spending on the enforcement of Prohibition, reduced political corruption and greatly reduced crime in the United States.

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

The only amendment to the Constitution ever to be repealed was overturned 75 years ago this month.

George Vierra, a consultant for vintners, growers and distributors throughout Europe, Asia and the United States, established Vichon Winery and Merlion Winery. He is the winemaker for Jeriko Estate. Since 1993 he has been teaching at Napa Valley College, where he maintains a website, His full paper on Prohibition can be found in the Thoughts section.

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