Home The Drunken State
Home The Drunken State

The Drunken State

There was a time when the United States government ran on hooch. Hard up for cash, taxes on whiskey and beer funded the Civil War. With 40 percent of government revenues coming from liquor taxes, alcohol made the dramatic post-war expansion of government possible so that by the 20th Century, the Federal government would have been unrecognizable in scope and function to a man of the 1800s, but would have been all too familiar to us.

The Department of Education was created in 1867, the Department of Justice in 1870, the Department of Agriculture in 1862 and the Department of Commerce and Labor in 1903. Within that time, the Federal government had become concerned with every aspect of life throughout the country. After the Civil War, the same whiskey taxes that had paid for cannons, aerial balloons and widows' pensions began paying for the transformation of the government into a booming engine of social change.

During the same period that the government was being unrecognizably reshaped, the major cities were being transformed by a tremendous immigration boom. Immigration had made it possible for the Union to win the war by providing an endless supply of fresh bodies to throw into the fight. German, Irish and Jewish immigrants came by the hundreds of thousands and made the Union victory possible.

Republican Progressives had looked forward to freeing the slaves, but were far less enthusiastic about filling the country with Catholics and Jews, who were not only bound for Democratic precincts, but did not share their faith. Progressive reformers cast an uneasy eye on the slums and the Democratic political machines that ran them and pursued a grab bag of strategies for curing their ills, from birth control to temperance to socialism.

The progressive vision of a New America was being funded by liquor taxes, but a combination of bigotry and health-nuttery, which was another of the elements of the modern country taking off, brought quite a few reformers around to temperance. Associating Catholics with liquor, they went after liquor itself. But liquor could not be outlawed, without also outlawing big government.

For the practical politician the link between liquor and big government was a web that should not be touched. The drinking American was making big government possible and should be left to drink in peace. But progressive reformers are ever deaf to such logic and quick to cut Gordian knots. Faced with a liquor revenue problem, they contrived a solution in the form of the personal income tax.

The personal income tax was unconstitutional, but with the end of the post-Civil War era and the revival of the Democratic Party as a progressive political movement, the country had entered a period where the Constitution meant very little. During the Wilson and Roosevelt administrations, that document, then not very much more than a century old, had come to be regarded as an outmoded work with very little relevance to modern times.

The Anti-Saloon League, rising out of the mists of an uncertain time, had assembled a coalition encompassing Klansmen, Suffragists, Socialists and Preachers focused on a single-minded agenda, but pushing whatever laws it had to along the way to reach its goal. And the road to Prohibition lay through such policy territories as the personal income tax.

Prohibition today is remembered mainly for the quaint scenes of smugglers and lawmen chasing each other on dark roads, speakeasies where liquor made in massive illegal stills was served, and the end of national integrity as an age of national hypocrisy was ushered in by wet politicians who voted dry. But Prohibition as a phenomenon matters little compared to the ways in which the campaign to achieve it and then hold on to it transformed the country.

Before the income tax, the progressive expansion of government had been built on a hypocrisy that reformers had denounced. A better world was being built with whiskey money, some of it, though far from all of it, coming out of the slums where the new immigrants worked and died. Afterward all that whiskey money went to a mob built out of the worst elements of the slums while the government fattened itself on a new source of tax revenue.

But the income tax was not nearly enough. The Federal government had been running shocking deficits in the 1930s. The budget deficit hit $903,000,000 in 1931, and then more than doubled in 1932 to $2,472,000,000. A 2.4 billion dollar budget deficit might not attract much attention today, but that same year revenues stood at only 1.9 billion dollars making the deficit larger than the revenues. A comparable budget deficit today would not be our usual trillion dollar booms, but something in the range of three trillion dollars.

With the Great Depression underway and the ultimate progressive Democrat with a big government agenda in the White House, the liquor taxes were sorely missed. Republicans lost 100 seats in the 1932 congressional election and with FDR in the White House, it was time to put an end to Prohibition and put all the lost revenue from liquor sales to work funding the New Deal.

By 1935, revenues had jumped to 3.6 billion dollars, nearly double what they had been only a few years earlier, but the budget deficit had gone up to 2.8 billion dollars because spending had surpassed 6 billion dollars reaching nearly 10 percent of the country's Gross Domestic Product. It would eventually reach 24 percent of GDP, a figure only matched by another Democrat. Obama.

Roosevelt's New Deal had drunk deeply of liquor taxes, but kept spending money like a drunken sailor, and even with the income tax and legal liquor sales, and a variety of other revenue raising gimmicks, the government had dug itself into a deeper fiscal hole than ever.

Social Security was born two years after the end of Prohibition. One of the creators of Social Security was Senator Pat Harrison of the Cullen-Harrison Act which legalized the sale of low alcoholic beer as a trial balloon for ending Prohibition.  What had been thought a sin by progressive Unionists had become the salvation of progressive New Dealers who were less interested in moral reform and more interested in building the institutions that would give them permanent political power. And if those institutions had to run through the saloon, so be it.

The expanding government had gotten a heady taste of how good steady revenues from sin taxes could taste, and from that day on it was hardly ever sober again, imbibing greater and greater quantities of the stuff. One tax led to another and then another. The more the tax revenues rolled in, the faster they were spent on creating and funding the bigger and bigger institutions of the perpetually expanding system of infinite progressive government.

Prohibition proved to be less about morals than about economics and the ways that governments try to make the unworkable policy keep on going just a little longer. That could be taken as a reference to the prohibition of liquor, but it applies equally well to the economic infrastructure of tax and spend policies. Prohibition had less to do with morals than it did with political power, immigration and taxation.

On a social level, temperance had less to do with liquor and more to do with attempts to reform a country whose cities were becoming unrecognizable megalopolises packed with immigrants who were building the modern vision of the world of tomorrow and threatening the world of today.

Prohibition became a reminder that modern technology and techniques were ultimately no match for the will of the people. It was the first real destructive test of the modern government's abilities and it failed socially and economically, forcing the government to go wet to finance its own operations. 

Prohibition is long gone but the consequences of it, including the cat and mouse game between organized crime and national law enforcement, the personal income tax and the budget deficit, the pressure group that forces the will of the minority on the majority and the promise that the government can perfect the men it rules over and the national orgy of hypocrisy that follows are still with us today.

With the end of Prohibition, the State accepted the idea that it had to corrupt in order to uplift, damn in order to save and do evil in order to do good. It had to become truly corrupt to be truly moral in the service of the greater good.


  1. Anonymous13/1/14

    You ain't seen nothing yet. Now the progressives will tax the air we breath. For now, just the part we exhale.
    The amazing thing is how many dumb-asses believe it's a good tax.

  2. Harvey13/1/14

    The appetite for tax and spend exceeds the supply of money. Even when they tax savings, confiscate retirement accounts and so forth. Spreading the wealth around spreads it too thinly. In comes the Fed. Daniel, could Levin's Liberty Amendments succeed? Is there another way to reverse Progressivism before America implodes?

  3. I don't know if it can succeed, but it is a more credible strategy than most of the party has

  4. Anonymous13/1/14

    And the new title will be the Stoned State when the legalization of pot makes its way across the country and finally the law of the land as the new revenue source that will enable an even bigger big government and higher and higher deficits.

    Truly brilliant last paragraph Daniel. Immorality and evil bring in the money.


  5. DenisO13/1/14

    Mark Levin's Constitutional solution can work, but right now, too many people love the "free lunches" the Demorats are selling them for their freedom and prosperity.
    Until these programs' disadvantages (the pain) becomes obvious, they will not want their States to change the Government. It will take time, but first they have to hear how it can be done, and the Enemedia will not cooperate.
    Mark Levin's Book TV video interview is worth watching to appreciate his solution: http://tiny.cc/nv0m9w

  6. Remind me again how Joe Kennedy built his fortune...?

  7. Anonymous13/1/14

    Until the Lefty dreamers are confronted with something of reality, and the discipline it demands, we will continue on with our phony money and unpayable budget deficits until the whole system cracks up. I don't like being so glum, but I see no urgency on either side. Democrats ignore the concept of value, and Republicans catch up "the new normal" a decade later so they can be acceptable company at elite cocktail parties.

    I have no problem with immigration (even unlimited immigration) if there wasn't so much stress on the system with all the bloated subsidies, handouts, bilingual education, administrative nonsense, multi-language ballots, etc. It risks inviting free riders who refuse to assimilate, and then we have Parisian car burning ceremonies to ring in the New Year.

    People on the other side think we're cruel. I say we are stating the obvious and not pandering to human weakness and resistance to change. Human beings are highly adaptable, but there has to be something in it for them. Like surviving, which can eventually turn into thriving. There is no such thing as abundance without scarcity to compare it to. We cannot always be on the rocket shot up, up, up! A dynamic economy requires losers along with winners. Life is not fair.

    Progressives have a utopian vision for the way life should be. Let's stand for life as it really is and give people a chance to thrive.


  8. Snackeater13/1/14

    The Department of Education was created in 1867? I thought Jimmuh Cottah created that in 1979.

  9. Anonymous14/1/14

    You do a better job teaching history than they do in school. Have you considered authoring an American history textbook? If we are fortunate enough to save this country in the short term, we definitely need to educate the young people properly and not continue to have them indoctrinated by the leftists.

  10. Thanks for the timely history lesson. A book of these would be a gift to America.

  11. On a related note, I think you could argue that the 16th Amendment nullified the 13th.

  12. We have met the enemy and he is us. That's an interesting re-interpretation of U.S. history. I knew that alcohol taxes played a huge role. So, pot taxes will also increase the reach and scope of government. That which is negative and evil about government is the same as in human nature. There will always be moonshiners outfoxing the revenuers.


Post a Comment

You May Also Like