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Hall 1 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 Hall 2 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 Hall 3 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 Hall 4 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 Hall 5 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. Hall 6 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 Hall 7 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.