Happy National Beer Day

Today is National Beer Day. It commemorates the day drinking beer became legal after fourteen years of Prohibition. In 2008, on the seventy-fifth anniversary of the event, I wrote the following blog post about Repeal. The post also included information  about the Theo. Hamm Brewery which reopened after Prohibition but no longer exists. Much of the material in the post comes from my book, Brewing Battles.

April 7 2008
Repeal – Seventy-Five Years Later

When Franklin Roosevelt became the 32nd President of the United States on March 4, 1933 the country was in the worst economic depression in history, with 13 million people unemployed. Roosevelt set to work trying to repair the nation’s economy. On March 12 he addressed the nation in the first of his many “fireside chats.” The president declared a bank holiday. Immediately after the fireside chat, he sent a message to Congress requesting immediate modification of the Volstead Act to exempt beer with an alcoholic content no greater than 3.2 percent alcohol by weight. Roosevelt believed that “now would be a good time for beer.”[1] The President was calling on the beer industry to provide the nation with a much-needed boost in morale as well as assist him in his agenda of reform and repair of the economy. In turn the brewers would get a much desired chance to start anew.

As the movement to repeal Prohibition gathered steam, proponents for reestablishing legal liquor sought to remove federal control and return regulatory powers to the states. State regulation of liquor prior to Prohibition had involved licensing of retail establishments as well as sumptuary legislation. States generally did not tax liquor before 1933. The Twenty-First Amendment repealing Prohibition and legalizing the production and sale of alcohol achieved the return of regulatory control to the states. The federal government resumed its primary concern with taxation.

The states, as well as the federal government, saw the brewing industry as a source of economic relief. Following Repeal, many states established Liquor Control Boards and began taxing alcoholic beverages. The highest tax the brewers had paid prior to Prohibition had been $3 a barrel.Modern Brewery estimated that the newly reestablished brewers were facing tax increases of “400 to 600 percent.”[2]

After fourteen years of Prohibition, on April 7, 1933 the legal production of beer resumed. The New York Times proclaimed that “beer flows” in 19 states. The newspaper was recording the return of legal 3.2 percent alcohol beer to many cities across the nation including Philadelphia, St. Louis, Baltimore, Milwaukee, and San Francisco. All of these municipalities held “gala night” in honor of modification of the Volstead Act.[3]Prior to Prohibition the country had approximately 1250 brewers; by June there were 31 brewers operating. In 1934 there were 756 brewers who produced 37,678,313 barrels. Production for 1914, the last “normal” year prior to Prohibition, was 66,189,473 barrels.[4] The brewing industry had achieved an amazing rebirth; the public was extraordinarily grateful. The challenge for the brewers, as the nation sought to regain its economic footing, was to maintain their good public image and restore their industry.

Repeal proponents had touted increased revenue as a benefit which made liquor taxes inevitable. Amazingly, a week after beer became legal, legislators passed a tax bill. Echoing their Civil War predecessors, Congressmen sought the highest possible rate from the beer tax that would not cause fraud and corruption. They settled on a rate for legal brewers of $5 a barrel plus a $1,000 annual license fee for each brewery.[5]

In the immediate aftermath of modification of the Volstead Act and prior to ratification of the Twenty-First Amendment, the government was looking forward to the economic benefits that Repeal would bring. Postmaster General Farley predicted that “it will provide approximately $800,000,000 annually in revenue.”[6] Taxes on beer had helped to reduce the government’s operating deficit and Farley was optimistic that the end of Prohibition would help reduce federal taxes on everything else.

Michigan was the first state to ratify the Twenty-First Amendment and the amendment became final on November 7, 1993 when Kentucky, Ohio, Pennsylvania, and Utah voted their approval. The amendment’s language made Repeal effective December 5, 1933. The Eighteenth Amendment and its antidote the Twenty-First stand as unique events in American history. The first outlawed a legal industry and deprived thousands of business people of their livelihood. The Eighteenth Amendment is the only amendment to have been repealed. The Founding Fathers used state constitutional conventions to enact the Constitution; the Twenty-First Amendment was enacted in the same manner. Joseph H. Choate, Jr., as head of the Voluntary Lawyers Committee, contributed this expeditious and successful legal approach as part of the anti-Prohibition movement.[7]

Both the government and the liquor industry were quite comfortable reestablishing their old relationship, particularly since officials were willing to limit tax increases, citing concern over the continued presence of bootleggers. Tax revenues had fallen to 1.5 billion in 1932 — the lowest collection since 1917; following Repeal they began to rise. In the first six months that legal 3.2 beer was available, Americans drank 7,037,969,264 eight-ounce glasses. This gave the government $84,917,539 in revenue.[8] Liquor taxes continued to grow in strength; by 1936 excise taxes on alcohol contributed thirteen per cent to the federal tax system, providing fiscal support for New Deal legislation.[9]

The brewing industry, newly legal and providing a product for which there was pent-up demand, was well situated to meet the goals of New Deal legislation that sought to increase production and reduce unemployment. Unlike other industries, they also had a history of government regulation and control. The challenge for the brewers would be to flourish in a new regulatory environment.

________________________________________
[1] Schlesinger, Almanac, 461-462; Quoted in Kenneth S. Davis, FDR, The New Deal Years 1933-1933 (New York: Random House, 1986), 63.
[2] Oregon State Archives, “Prohibition in Oregon: The Vision and the Reality,” http://sos.oregon.gov/archives/exhibits/highlights/Pages/prohibition.aspx (Accessed April 7, 2017); Modern Brewery, February 1933, 20. Modern Brewery Age began as The Brewer’s Art (1923-1932), and then became Modern Brewery (1933-1935), Modern Brewer (1936-1940), and then Modern Brewery Age (1940-2004). It is now available online only at http://www.breweryage.com/.
[3] “Beer Flows in 19 States at Midnight as City Awaits Legal Brew Today,” New York Times April 7, 1933, 1.
[4] United States Brewers Association, Brewers Almanac (Washington, D.C.: USBA, 1940), 14; “Chronology of the American Brewing Industry,” Beerhistory.com, http://www.beerhistory.com/library/holdings/chronology.shtml(accessed January 16, 2002).
[5] Carl Miller, “We Want Beer: Prohibition and the Will to Imbibe,” Beerhistory.comhttp://www.beerhistory.com/library/holdings/prohibition_2.shtml (accessed January 20, 2006).
[6] “Farley Holds Liquor Will Balance Budget,” New York Times,September 1, 1933, 36.
[7] Brewers Almanac, 1940, 60; United States Brewers Association, Brewers Almanac (Washington, D.C.: USBA: 1980), 110; Robert LaForge, “Misplaced Priorities: A History of Federal Alcohol Regulation and Public Health Policy” (Sc. D. diss., Johns Hopkins University, 1987), 135-136.
[8] New York Times, October 28, 1933, 32.
[9] Amy Mittelman, “Taxation of Liquor (United States)” in Alcohol and Temperance in Modern History: An International Encyclopedia, ed. by Jack Blocker, et al, (Santa Barbara, 2003), vol. 2, 609-61.

Excerpted from Brewing Battles: A History of American Beer (Algora Publishing, 2007) copyright Algora Publishing 2007

 

 

 

 

View of the Theodore Hamm Mansion at 671 Greenbrier. The building was destroyed by a fire in 1954.

In 1934 the 756 brewers operating breweries faced a world they could not have completely prepared for and there was nothing preordained or predetermined about who would survive and who would fail. Some breweries initially succeeded but now no longer exisit. One such brewery was the Theo. Hamm Brewing Company, St. Paul, Minnesota. The Theodore Hamm Brewing Company dated from 1864. Theodore Hamm, the founder was from Baden, Germany. The company incorporated in 1896; Olympia Brewing bought the brewery in 1975. William Hamm gave St. Paul Hamm Park in 1910 to honor the memory of his father, Theodore. The park still exists as does the site of Hamm’s original brewery. The brewery is no longer operational and there are plans to turn part of the building into an Asian Community Center.[1]

 William Hamm’s son, also named William, was famous for having being involved in a kidnapping which remains notable because the case, in 1933, was the first time the FBI used a now standard procedure for identifying finger prints. The “latent fingerprint identification” procedure uses silver nitrate to obtain fingerprints from surfaces that can not be “dusted” for prints. Using this method the FBI determined that the Barker/Karpis gang had been behind Hamm’s kidnapping.[2]

________________________________________
[1] Downard, Dictionary, p. 87; “A Walk Through Historic Upper Swede Hollow by Karin DuPaul St. Paul, Minnesota © 1994”, http://www.swedehollow.org/Photos/SwedeHollowWalkingTour/SwedeHollowWalkingTour.html, (accessed on April 7, 2017); New York Times, June 12, 1931, 16; personal communication, Tom Brock, Marketing Projects Director,St. Paul RiverCentre Convention and Visitors Authority, March 26, 2007.
[2]“A Byte Out Of FBI History: Latent Prints in the 1933 Hamm Kidnapping, https://archives.fbi.gov/archives/news/stories/2003/september/hamm090803, (accessed on April 7, 2017).

unpublished material – copyright Amy Mittelman 2017.

Save

Save

Save

Save

This entry was posted in Beer, Blogs, Business, History, Politics, Taxes and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *