From the Archives: Control of Liquor Sales Was States’ New Job in 1933
By U.S. News Staff
January 16, 2020
This article originally appeared in the Nov. 4, 1933, edition of The United States News, which merged with World Report magazine in 1948 to become U.S. News & World Report.
The open season for liquor-control laws is at hand.
With repeal on Dec. 5 of the 18th Amendment accepted as a certainty, the States now face the problem of what to do about it. Only nine have adopted laws to regulate production and sale.
Nine different States have adopted nine kinds of liquor laws. Already rumblings of discontent are discernible in some of these States.
And the Federal Government has barely made a start in caring for its share of the enforcement job. Several Government offices have been accumulating data, now on the President’s desk. First steps are being taken by a Congress committee to prepare a legislative program.
Must Start All Over
The whole system of Federal and local governments now must undertake the herculean task of starting all over again with liquor control. It faces brand new problems that have arisen during the 14-year period of prohibition. It faces the complicating issues of the developing machine age. This idea of recognising that the liquor appetite resists stifling by prohibitory laws thus brings up political, economic and social problems the solution of which will require essays into entirely new fields of regulation. >From the Federal standpoint, attention will be centered mainly on the revenue side of the picture, with the Government also committed to the duty of helping dry States to keep dry.
Marketing Agreements
A new angle arises with the marketing agreements now being threshed out by the Department of Agriculture and its allied Agricultural Adjustment Administration. These agreements are to cover the purchasing of grain by liquor producers and possible control over distribution.
Primarily, the buyer of liquor will find that State laws affect him most. Here is a disturbing situation, with repeal apparently less than a month away.
It is a situation that finds nine States ready with experimental control plans, four more about ready since their legislatures are debating control plans, and a dozen or more likely to act within a month or two after the 18th Amendment actually has been erased from the Constitution.
Conflict of Opinion
Complicating the picture is the fact that there is a division of opinion within each State on the question of controlling the liquor traffic. Different sections of a State ideas often have violently opposed ideas on the subject.
In an effort to take care of that, local option is entering into most of the control plans, so that communities can take liquor or leave it, according to local sentiment.
But assuming that each State works out a solution suitable to itself, then there arises the problem of making the whole national system click. Here is a question that is just coming into prominence.
Effect of Tax Compilation
An illustration will show how annoying this phase can be. Suppose New York, for example, would collect a $1 a gallon tax on whisky produced inside its borders. Then suppose that New Jersey would get just 25 cents a gallon from its producers.
Producers would be tempted into New Jersey, where the tax was lower, and New York production would fall off, with a corresponding loss in revenues. And New Yorkers likely would get much of their supply of spirits from Jersey.
So several movements have been started among groups of neighboring States to work out a semblance of uniformity in their taxes and their methods of control.
Two Plans for Control
Basically there are two methods of controlling the sale of liquor. First is the license system, which held sway in pre-prohibition days. It was tainted by political intrigues: and the desire for private profit inspired many novel methods of influencing consumption.
The second system is that of State monopoly or management. It is a new trend in liquor enforcement, and several States plan to give it a trial. Here the profit element is subordinated, especially if the State confines sales to State-owned and operated establishments.
Blending of the license and monopoly systems also is being attempted, as in Delaware.
Canadian Method for Montana
Sometimes, under the management system, buyers are required to have permits. Montana will give this idea a workout, having borrowed it from Canada.
The permit plan has its followers, who say that it simplifies the job of controlling those who abuse the liquor privilege, and that it is not hard to detect those who buy more than they need and then bootleg it. They add that it is an orderly method of sale.
Then the opponents come back with the claim that it encourages permit holders to buy all the law allows, and if that is not enough, to get it from bootleggers.
Machinery Yet to Be Set Up
Most of the work of putting the country under liquor control is yet to be done. Past experience is being reviewed. Experience of other countries is being studied. States which have not yet acted are looking over the laws already adopted by their neighbors.
Most successful country in licensing liquor is England, where the system is in rather good repute, quite in contrast to the pre-prohibition experience in the United States.
Of course, the high respect for law and the integrity of enforcement officials has helped along the license plan, conditions which were not so conspicuous in the American operation.
England has tightened its licensing in recent years and consumption of high-power beverages has dipped noticeably. Also, beer drinking has declined and fewer drunkards are running afoul of the law.
Control in Scandinavia
Norway, Sweden and Finland have discarded the license system, supplanting it with state management, wherein the government has created a monopoly. A plan of this sort also prevails in Russia, and the Canadian provinces have adopted it.
Private limited dividend corporations handle the traffic in Norway and Sweden, with king-appointed boards keeping a hand in affairs.
Finland, on the other hand, has placed control In the Alcohol Company, owned and operated by the state. Licensing of shops is gauged by local attitude. Individual purchases are limited as to quantity, but beer under 2.25 per cent is sold without any restrictions.
Finland takes the profits from alcohol beverage sales, while Norway and Sweden capture excess profits.
Russia’s state monopoly encourages temperance and it has sole rights to handle liquor output. It is trying to limit sales to government stores. Profits of the monopoly are taken by the government.
Local officials in Holland issue licenses, which are allotted according to population. All the business is run privately and profits are not subject to state restriction.
System in Canada
All of Canada’s provinces have liquor control boards which operate on the monopoly plan. Manufacture is in private hands, although the control boards supervise production.
Distilled spirits are sold through government stores, by hotels, the bottle, and sometimes by the carton or case.
In general, beer and wine are available, and little effort is made to limit the quantity the individual buyer may procure, although some provinces allow sale at government stores only, whereas others permit light beverages in beer parlors, clubs, and similar places.
Local option is an inherent feature in Canadian provincial liquor systems, except for British Columbia. To satisfy alcoholic appetites in local dry areas, liquor is available by mail or express.
British Columbia has a local option idea but it is concerned only with beer parlors. Other than that, the provincial liquor set-up prevails.
The provincial treasuries take all the profits from liquor sales at government stores.
Plans in This Country
Here in the United States the evolution, of liquor control systems is in its early stages, with nine States prepared for repeal with systematic laws.
Patterned on the Canadian monopoly idea, Montana has a law which sets up public operation of the liquor.
Excise taxes amount to less than $6 on domestic spirits, 26 cents a gallon on domestic beer, $1.65 a gallon on domestic sparkling wine, and 7 ½ cents a gallon, plus 6 per cent sales tax, on domestic still wine.
However, the laws allots only $25,000 to set up stores all over the State, and there is to be one in each county which wishes to allow liquor sales. That is $300 to a store in case all the counties decide to permit liquor sales.
The State Liquor Control Board has full authority and buyers must take out permits. No drinking is allowed on the premises. Few restrictions are placed on beer, however. Some talk has been heard of revising the law next year.
Florida has gone to the other extreme and its law of March 27, 1933, will allow counties and cities regulate themselves, with county officials making up the control boards. So far few boards have been created.
New York Control Plan
New York has an elaborate beer control plan, directed by State and local boards, with local option permitted. Present taxes are $1 a gallon on liquor, 10 cents on still wines, 40 cents on sparkling wines.
New York’s board announced rules Nov. 10 which prohibit drinking of spirits at bars and permit limited licensing of retail stores for package sales. Liquor may be served by restaurants, clubs and hotels. Liquor sales must be made for cash, retail credit transactions being forbidden. The plan may serve as a model for many other States.
California Bars Saloons
California has outlawed the saloon, as well as local option. If wine or beer is sold on the premises, liquor is not allowed. Package liquor sales are permitted from retail stores. Wine and beer may be served at public eating places. The State Board of Equalization directs the traffic.
Delaware has a mixed system, with both State and private sales. Liquor Commissioner Pierre S. duPont says sales will be made privately at first. Later the State may buy and sell liquor. Its law lays taxes of $1 a barrel on beer, 40 cents a gallon on wine, 75 cents a gallon on spirits under 25 per cent alcohol, $1 a gallon on spirits above 25 per cent.
Drinking at bars will be illegal in Delaware and “treating” is to be discouraged where sales are allowed. Package sales of liquors are to be permitted at groceries, hotels, restaurants and clubs, with only one bottle to a customer.
In New Mexico there is a law which created a board of liquor control. Buyers must have permits, and excess profits from sales go to the State for school support. Drinking in public is forbidden except at meals. Counties or cities of more than 10,000 population can vote to allow liquor traffic. Of the counties, 22 have voted wet, 1 dry, and 3 have not acted.
Arizona and Colorado
Neighboring Arizona vests its control of alcoholic beverages in the State Tax Commission, which can license groceries, drug stores and other stores for package sales, not to be drunk on the premises. Eating places may serve liquor with meals. Thus no opening is left for revival of the saloon.
To the north, Colorado allows wine and beer-drinking in restaurants, clubs, and trains. Spirits may be sold for off-sale consumption. The act seeks to stop drunkenness and provides right of action against persons selling liquor to those who imbibe too freely.
With a bit of interest in the revenue side of the question, Colorado has provided taxes of 3 cents a gallon on beer, 3 cents a pint on wine, 10 cents a pint on spirits.
Kansas and Missouri
Veering eastward, Kansas is found in the dry column, but the House Judiciary Committee has just recommended that the State take a vote on repeal of its 52-year-old prohibition law, a pioneer in the anti-liquor movement.
In Missouri the Legislature is mulling over the control problem. One plan would prohibit drinking on the premises where liquor is sold, except hotels, clubs, and restaurants. State-operated stores for package sales have been proposed, with a liquor control board having wide powers over license and sale, discouraging consumption. Local option sentiment is noted. Manufacturing profits would be limited to 10 per cent net, the rest going to the State.
Iowa Considers Monopoly
Iowa’s Assembly is busy with the liquor problem. The session convened Nov. 7. The State Liquor Commission has advised State monopoly after repeal, with State-owned or controlled liquor stores.
This commission recommends creation of a state controlled holding corporation to regulate private import and manufacture, with state stores distributing privately owned liquor supplies. Private capital engaged in the business would be allowed 6% on its investment, other profits going to the state.
All consumers in Iowa would be required to take out licenses, although restrictions on beer and light winds might not be heavy. On premise consumption is advocated and outlying of the saloon is favored. Local option sentiment is noted.
Situation in New England
In New England, two states already have control systems. Connecticut’s control commission of three has licensing powers. It permits beer drinking at “taverns,” provided they are not screened. Package sales of spirits at stores are to be permitted, with size of bottles to be not less than 24 ounces or 1 quart. State-wide sale will be allowed unless towns or cities vote for a local option.
Rhode Island passed its control law last April, creating an alcohol beverage commission of five members. The commission has control over imports and exports of liquors. Package sales are to prevail, but “tavern-keepers” or “victualers” may serve liquor at tables where food is served.
Certain stores, except drug, will not be allowed to sell liquor. Off premise consumption is to prevail.
At all general elections in Connecticut, local ballots are to carry referenda at which voters may express their will on the prohibition question.
Excess wholesale profits are to go to the state. Persons who sell liquor to drunkards who injured persons or property of another are jointly or separately liable for damage.
Massachusetts legislature is in special session, getting ready for repeal. Governor Ely advocates “modified saloons” as the only alternative to the “speakeasy.” Opposition to his plan has been voiced, typically by some women’s clubs.