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Taylor Hall
Professor McKluckie
FYS: Social Documentaries of the Great Depression
2 April 2013
Small Alcohol Businesses in the Great Depression
Some government reforms in the United States, such as the repeal of prohibition led to
the success of the alcohol industry which led to thriving small businesses in alcohol production,
transportation and sale during the Great Depression. Other government reforms such as the New
Deal, did not help support small businesses.
In the mid- nineteen twenties small businesses thrived. The twenties, known as the
roaring twenties brought out the best in people. It was a prosperous time. Production of goods
and services was up so consummation was up. The American people were living the good life
and spending money, possibly too much money. As more Americans bought on bad credit the
higher stakes became. The more bad credit an average middle class American had, the further he
fell in the stock market crash of nineteen-twenty-nine. When the crash hit the roaring twenties
came to an abrupt halt.
At this point the United States of America entered what is known as the Great Depression.
Selcuk writes, “Depressions are prolonged periods of economic downturns often characterized
by a rise in unemployment, general fall in commodity prices, lower production levels and in
many cases, lack of credit facilities or borrower apathy. Depressions are in many cases triggered
by events in a specific economy or a limited number of economies even though their effects tend
to transcend the national borders of the economies in question” (223). In this way, the
Depression was one of the worst periods in American history and did cause a severe disturbance
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in world affairs. Perhaps the group most affected by the stock market crash, was the small
business owners of America. These small businesses did not have any cushion to fall back upon.
They did not have a surplus of money stored away which they could use to recover with. What
small business owners made they immediately invested back into their company or used to put
food on the table. They had no leeway. When upper-class Americans lost their stocks in the crash
there was a trickle-down effect. As the upper-class lost money so did the middle class and lower
classes. Because it is cheaper to buy in bulk, larger companies were able to provide the same
goods and services that small businesses could but for less. Times were tough for everyone.
Almost no one would choose to buy from the local small businesses if they could procure the
same goods for less from a larger business. No one could afford it.
In an attempt to redistribute the remaining wealth of the nation, United States
Government attempted to implement reforms and passed legislation that would boost the
economy during the Great Depression. These laws were intended to help create jobs, obtain
better benefits and pay for those who were working and to eventually pull the United States out
of the Depression.
The most prominent piece passed by the government was the New Deal. The New Deal
programs, passed by President Franklin D. Roosevelt, were intended to provide relief to the
middle and lower classes of America, recover the US economy in general, and reform it so that
crisis in the future could be avoided. The New deal, though it created several prominent labor
unions, did not successfully bring the US economy out of the dumps. The New Deal did nothing
to help support the middle class small businesses. As stated by Young, “During the New Deal,
when opportunities arose to forge a new consensus among small business groups, policymakers
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instead followed old scripts and reinforced received identities. Consequently, small business
never came to occupy an important space in the post-New Deal political order” (437).
Another major reform for the United States was the repeal of Prohibitionor the eighteenth
amendment. In nineteen-twenty-three the US government passed the twenty-first amendment to
the Constitution and there-by legalized alcohol production, transportation and sale. Prohibition
was incredibly successful at lowering alcohol consumption (Blocker, 241), which was the goal
of the movement, but also at hurting the US economy. Blocker writes, “Prohibition whipped out
and industry” (236) and “The liquor industry was virtually destroyed” (237). The twenty-first
amendment reopened the alcohol industries. By legalizing the production, transportation and sale
of alcohol money was brought directly to the United States economy rather than to the
moonshiners who performed alcohol trade illegally.
The twenty-first amendment opened several new doors for the American people. Whether
it was a new business or a new couple spending money out on the town, these new options
supported small business owners and helped the US economy.
The ability to buy alcohol legally was presented openly to Americans and when persons
are faced with difficult times and tough choices many will often turn to drugs and alcohol.
Though this is obviously detrimental to a person’s health, it does bring money into an economy
because one must spend money in order to obtain such commodities. A study that was printed in
the Journal of Addictive Diseases showed that people drink more during tough times. The study,
performed during the recent great recession of 2010, showed that men and women were more
likely to drink, drink in excess and binge drink when faced with negative economic and social
factors such as loss of job, poor working conditions and home ownership problems (Richman et
al.). Though this experiment was performed during the great recession there are many
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similarities between the nineteen thirties and the recession. Similar social and economic stress
factors would have applied. People drank more due to high stress and supported the small
alcohol based businesses that developed due to prohibition removal.
Alcohol production businesses thrived. Small business owners jumped at the chance to
invest in Alcohol. People that had been in the alcohol production business before the eighteenth
amendment reopened their doors. New businesses also opened. Wineries and Vineyards were
common in the American mid-west and west because grapes are hardy and could withstand the
dry conditions. One vineyard had been converted to a mushroom farm during prohibition. It had
been an extremely successful small business before prohibition and the Great Depression but had
closed when the Eighteenth amendment had been put into place. With much underground storage
for what used to be wine it became the ideal spot for a mushroom grove plantation. After
prohibition was repealed it was converted back into a winery and is now a popular tourist
destination. The couple that now runs the small business is happy to serve alcohol to all and
support the significant culture and history the place represents (Morton).
Also due to Prohibition repeal the Bar industry increased drastically. Bars were one of the
few places to have a good time during the Great Depression. They were used as meeting places
for social and political reasons. Generally located in towns they were central to all community
members and easily accessible. When Prohibition was repealed, the nightlife in larger cities
exploded. Restaurants, sex shops and bars became an instant attraction for the wealthy upper
class people who could afford such attractions. Large nightlife was most prominent along the
East coast of the United States. Cities such as New York, Boston and Philadelphia were rapidly
expanding. As small farms in the mid-west were bought out by banks and larger farming
companies the farmers either turned East or west. In the west they became migrant workers. In
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the East they became industrial workers. This increase in city population called for the demand
of more small businesses (Erenberg).
Through the great depression there was a severe decrease in the number of small
businesses. This occurred despite the United States Government’s attempts to save small
businesses with the New Deal. Large companies were not as severely hurt by the Stock exchange
crash and therefore were able to recover more quickly. The large companies bought out most
small businesses especially cotton farms in the mid-west of America. The only industry that was,
not only able to survive, but do well during the Great Depression was the Alcohol related
industry. The Alcohol related industry was able to do so well because humans drink more during
periods of high stress and alcohol brought people together. Small alcohol production businesses
such as wineries and vineyards excelled during the Great Depression in order to keep up with the
demand. Bars and restaurants did well because they were a central gathering place in smaller
town and an area to have fun in larger cities. The poor drank because it was an escape from the
everyday realities and the rich drank because they could afford it and it was fun. Therefore,
Alcohol was accessible to all classes in America in the nineteen thirties. None of this would have
been possible without the twenty-first amendment, or the repeal of Prohibition. Prohibition was
successful in lowering the alcohol consumption in the United States during Prohibition and
during the time period after prohibition (Blocker). This did not, however, mean that new
businesses were not opened with the repeal of prohibition. Prohibition shut down an entire
industry in the United States and hurt the economy. The repeal could only bring good things.
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Works Cited
Blocker Jr., Jack S. “Did Prohibition Really Work?” American Journal of Public Health 96.2
(2006): 233
-243. Print.
Erenberg, Lewis A. “From New York to Middletown: Repeal and the Legitimization of Nightlife
in the
Great Depression” American Quarterly 38.5 (1986): 761-778. Print.
Lessig, Jyrki Johannes. “What do we need to bring about a financial crisis? A long-term look at
the
development of banking systems, money supply and crises 1850–2010” European Review of
History:
Revue europeenne d'histoire 19:6 (2012): 899-923. Print.
Morton, Lucie T. “Winemaking Renaissance in Hermann, Missouri” Historic Preservation;
Quarterly of
the National Council for Historic Sites and Buildings 36.6 (1984): 38-41. Print.
Richman, Judith A., Rospenda, Kathleen M., Johnson,Timothy P., Cho, Young Ilk, Vijayasira,
Ganga,
Cloninger, Lea and Wolff, Jennifer M. “Drinking in the Age of the Great Recession” Journal
of
Addictive Diseases 31.2 (2012): 158-172. Print.
Selcuk, Yrd. Doc. Dr. “Comparisons between the Long Depression, the Great Depression and the
Global
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Financial Crisis” International Journal of Management Economics and Business 8.16 (2012):
223–244.
Print.
Young, McGee. “The Political Roots of Small Business Identity” Polity 40.4 (2008): 436-463.
Print.