Prohibition

I'm off this afternoon to talk about Indiana Liquor Laws to the (aides of) about 50 Indiana Senators and Representatives. Here the talk:

Nov 20, 2015 – State House
Bob Ostrander

WELCOME

My bio is probably in order first. After 15 years in Data Processing I started a company, Public Brand Software, that distributed shareware mail order. On disks. 360K disks. It was Inc Magazine's 95^th fastest privately-owned company in America; so when the Internet came around I sold to Ziff Davis, publishers of PC Magazine.

Three years later Ziff closed the Indianapolis operation but that whole internet thing seems to be working rather well.

Since then I've owned pieces of a bar and a brewery, helped some start-ups, and created the IndianaBeer.com web site and blog. I've also written Hoosier Beer, Indiana Prohibition, and the 4-volume Indiana Bicentennial. All available at Amazon of course. And I stayed at a Holiday Inn Express last night.

If you have any questions, just shout them out.

Let's start with a 5-minute history of the events in Indiana that led to two periods of Prohibition.

Way back when, the land this building sits on was inhabited by everything from squirrels to mastodons. Then the Ice Age covered most of northern Indiana but it went away and left rivers and hills to the south. Then came the first human immigration. Paleo-Indians roamed this far north from Mexico and left mounds scattered across the state.

The “Native” Indians that met the Europeans came from the east having been pushed out during the Beaver Wars in New England.

Then the French, Spanish, and finally Englishmen used the midwest as an endless source of meat, firs, cropland and wood.

TERRITORIAL GOVERNMENT

The English gained control and the Indiana Territory was formed in 1790. Territorial Governor William Henry Harrison had complete quasi-military control of the state. He immediately instituted the first Prohibition law in Indiana, prohibiting furnishing liquor to Indians and soldiers.

This was a year before the federal government put a liquor tax into effect (which was the U.S.'s first tax rather than excise on imports). That, of course was the basis of the Whiskey Rebellion in Pennsylvania. Something that we out in the hinterlands didn't even notice. Oh, and the soldiers went back to wet status in 1795.

Jean Jacques Dufour moved to Vevay and started growing grapes In 1798. His was the first successful winery in the U.S.

Maybe it wasn't great wine but people did buy it at $2 per gallon. It would be 200 more years before true two-buck chuck came to Indiana. Dufour's book The American Vine-dresser's Guide, Being A Treatise On The Cultivation Of The Vine, And The Process Of Wine Making” is still in print.

Harrison put in other rules before leaving when Statehood came in.

1805 – No liquor could be sold within 30 miles of any meeting with the native tribes.

That same year came licensing of taverns. The county courts sold these licenses at $12.

1806 – The area within 40 miles of Territorial Capitol, Vincennes, was declared dry to Indians.

1807 – Sales to minors was prohibited. A minor at that time was under 16 years old.

1810 – Militia officers were forbidden to furnish alcohol to enlisted men. This might have been because the men voted on who would be their officer. Or maybe it was just that officers were cheap.

STATEHOOD

Statehood in 1816 saw a new power base in Indiana in the form of Jonathan Jennings and the original 43 men who wrote the Constitution. 

 

The state immediately started licensing breweries. Two got licensed that first year - one by Ezra Boswell of Richmond and the other by the New Harmony Colony – which had been making beer, whiskey and wine for many years as part of the Utopian society's income.

Prohibition of Sunday sales also popped up right away. To get a license, taverns had to have 12 petitioners (free white males) that would affirm the licensee was a person of good moral character and that the inn would be for the convenience of travelers. This, of course, didn't slow down new tavern starts but the $500 surety bond needed took inns from the front rooms of roadside farm houses to specialized businesses. By 1819 an inn had to have rooms to let. This changed the landscape from roadside rests to what passed for hotels in the day.

A few more breweries opened early on and most of these quickly failed. Jacob Salmon in Madison did have one that lasted until the civil war as Greiner's. Edward Mason in Fountain City was run out of town by his fellow citizens. New Harmony shut down production in 1826 then sold to teetotaler Robert Owens the next year. Boswell's Richmond brewery closed in 1831.

1855 PROHIBITION

This might be a surprise but the first statewide Prohibition in Indiana was in 1855.

Alcohol was very contentious after the Civil War. There were more distilleries and breweries but the temperance movement had lots of wealth and attracted crowds for the preaching extravaganzas.

That no person in this state shall drink any whisky, beer, ale, or porter as a beverage, and in no instance except as a medicine.

This was passed by the Senate 29-18 and the House 51-41 in 1855. It was completely a push by the Democratic Party who had control of both houses (– 26-24 and 57-43). Note that wine and cider were still allowed.

The law allowed medicinal alcohol and set up a state agency to stockpile and sell it to distributors in the drugs trade – those are the people who had the distribution lines to the pharmacists. They got paid $1,000 each for this task.

Many lawsuits followed., by distributors, breweries and distilleries. Appeals came from both sides, commerce and constitutional (you've heard this story before, right?) In the end the Supreme Court of Indiana found the law unconstitutional. The state government lost about $100,000 dollars directly on this effort – does anyone want to estimate how much that would cost now?

Prohibitionists were not amused but went on to other things including Anti-German terrorism in Cincinnati, Louisville and Chicago. Tipplers were not amused by the prohibitionists and staged The Lager Beer Riot of Chicago in 1855 to protest an Illinois dry-Sunday law. This resulted in one death and 60 arrests.

POST-CIVIL WAR

It took 50 years but Prohibition did come around in 1918. During the interim:

There were 56 breweries in Indiana at the start of the Civil War. The Feds put a $1 per barrel tax on beer for funding. The number of these small breweries dropped a bit but after the war bounced back to 67.

In 1872 the National Prohibition Party was formed, getting 2,100 votes for President.

“Baxter Laws” came around in 1873 and were about the most onerous the Republican Party could put into place.

A tavern license had to be supported by a petition of half of the voting-eligible inhabitants (still white males). A $3000 bond had to be financed. Taverns needed to close at 9pm. No sales were allowed on Sundays, election days, to minors (still 16), and habitual drunkards. Who determined the status of habitual drunkard? The wife or family of any person could tell a landlord the person was one and on that word the landlord had to shut off the taps to him.

This and other instances of overkill were too much for the average person and they voted the Democrats into both congressional houses in 1880. Being the ex-opposition party, they put different rules in place. Not necessary wetter or drier, just different. Not toothless but still needing some dental work.

Closing time went to 11pm. Public intoxication became a crime. The age of majority raised from 16 to 21. Minors buying liquor became a crime for the buyer rather than the seller. The “habitual drunkard” part of the earlier laws, Sunday and election day sales restrictions were all kept.

TEMPERANCE

Temperance campaigns started up big time then. Rallies in dozens of cities, small and large, attracted crowds and contributed to the coffers of the Womans Christian Temperance Union, the Anti-Saloon League, the the Prohibition Party. Smaller efforts were the red ribbon campaign, the blue ribbon campaign, the Youth Temperance Alliance of America, the National Temperance Society, the International Reform Bureau, the Catholic Total Abstinence Union, the Order of the Sons of Temperance, the National Christian Board of Temperance, the Dry Democratic Organization and the Indiana Dry Federation.

Even the Klu Klux Klan of Indiana supported prohibition. They were instrumental in putting Indiana Secretary of State Ed Jackson and U.S. Senator Samuel Ralston in office. The KKK was anti-alcohol as well as anti-Catholic, anti-Jewish anti-Black and anti-gambling. Then, in 1926, it all unraveled when Indiana's Grand Dragon, D.C. Stevenson, outed government Klan members and was convicted of abduction, rape and murder.

The largest of the dozen dry campaigns was carried on by Indiana's own Billy Sunday who preached to millions in temporary wood gathering halls in towns from Boston to Kansas from his home in Winona Lake. These halls usually held about 20,000 people and Sunday often received the entire collection plate. His most famous sermon was called The Water Wagon and “get on the water wagon” became a rallying cry for many prohibitionist organizations.

“I am the sworn, eternal and uncompromising enemy of the Liquor Traffic. I have been, and will go on, fighting that damnable dirty, rotten business with all the power at my command.”

Sunday was pro-women's suffrage, against child labor, capitalists, Jim Crow, dancing, immigration, theater, evolution, cards and novels. He became quite wealthy of course and the call for dryness did not end with Prohibition or even Repeal. The Prohibition Party Convention was held in Winona Lake in 1948 and they got 103,489 votes nationwide.

(In 2012 the Prohibition Party Convention was held at the Adams Mark Hotel at the Indianapolis Airport and the slate got 519 presidential votes. Total. Nationwide. Their convention for 2016 has been canceled.)

LOCAL AND COUNTY OPTIONS

The Republicans were back in charge in 1881 when they and the Methodist Church tried again with constitutional amendment that went nowhere due to the opposition of State Senator John Hill who was an investor in the Madison Brewing Co.

Other state laws allowed cities to collect brewery taxes and taxes from distributors. That was declared unconstitutional in two years.

In 1895 the Nicholson law allowed remonstrants against tavern licenses to file objections to any license. This resulted in 167 townships and 6 cities going dry.

The Moore Amendment allowed not only specific objections but let white adult males put in an ongoing objection to all liquor licenses. In effect this made a “NO” result standard that each tavern would have to fight by getting out the vote. 24 counties, 32 towns and 18 cities went dry under this rule. This could be expensive to impossible since the rules required no check on the signatures on remonstrances.

There were some cases where breweries tried to stay open by shipping their output across county lines. The Huntington Brewing Company was the focus of a local-option raid in 1911 where the owners were not jailed as “they employed a number of men about their plant who would be thrown out of employment if [the owners] were deprived of their liberty” - Indianapolis Star, June 13, 1911.

FRANK HANLY

Governor Frank Hanly was the Governor from 1904 to 1909. He and the Republicans were voted in on an anti-alcohol, anti-gambling platform. He immediately called a special session to pass local options. (Sen 32-17, House 55-45 along strict party lines.)

By 1907 counties could vote themselves dry – something which 70 did (but 43 rescinded). By the time Prohibition came around in 1920 there were ten states with county-option dry areas: Idaho, Indiana Illinois, Michigan, Minnesota, Montana, Nebraska, Ohio, Oregon and South Dakota.

TERRE HAUTE

It's worth a breath about Terre Haute in the early 1900s. City candidates routinely handed out business cards that could be exchanged for a glass of beer at any tavern in town.

The 1900 Census noted 14 houses of prostitution in just one block of Second Street. Mayor Donn Roberts was convicted of election fraud in 1915 and went to prison. 7 breweries made Terre Haute the largest beer culture in the state. 5 large distilleries had been going since before the Civil War. A very interesting town to investigate.

NATIONAL PROHIBITION

The US's 18^th amendment started in 1920 but Indiana already had a Prohibition – since 1918.

The Republicans took over all the major state offices in the 1916 elections. The Governor, Attorney General, Secretary of State, Treasurer were all lost by the Democrats as well as control of the House. The Senate ended up a tie when the Democrats lost 24 seats.

The Anti-Saloon League gave the legislature a petition with 250,000 signatures and newspapers around the state cried “DRY” in big headlines. Indiana was dry with a vote of Sen 70-28, House 38-11. Governor Goodrich signed the law immediately and April 2, 1918 became Dry Day.

During Prohibition, people, of course, were out of a job in distilleries, breweries, wineries, and pubs. We don't have good counts for this but we can count during Prohibition, 40 breweries closed their doors and 18 reopened afterword.

Have you noticed that Prohibition was and still is the only Constitutional Amendment that takes away rights from the people?

Indiana was the 35^th state to ratify Prohibition. Nebraska was next, three days later, giving the 36 needed for the amendment to take effect.

PROHIBITION LAWS

The National Volsted Act set down rules for everyone, but several states instituted their own more onerous laws.

In Indiana the Wright Bone Dry Law was an omnibus that took effect in 1925. It called for:

• $500 fine and 30 days in jail for possession of any alcohol
• Empty bottles and even the smell of alcohol were evidence of guilt.
• Alcohol in a vehicle was a felony. The owner, driver and passengers of a car were guilty if a rider even had a flask.
• Local prosecutors were given a personal $25 bonus for each conviction.
• Medicinal sales were outlawed.
• The law went so far as to ban the sale of cocktail shakers and hip flasks. With the jazz age coming on strong, these were fashion items but at least they didn't outlaw garters.

There were 250 arrests the first week the Wright Bone Dry Law went into effect. Statistics aren't available but many historians estimate 10,000 arrests in Indiana alone resulted before Prohibition ended.

EFFECTS OF PROHIBITION

The effect on workers was staggering. Not only breweries, distilleries and the few wineries laid off people but the taverns (most of them anyway) closed up putting thousands of men on the street. Yep, men only – women could not yet work at a bar.

Obviously thousands ended up in jail. The KKK and the Horse Thief Detective Association (which both had a history of post-war lynchings) took it on themselves to anoint 20,000 “constables” who raided gambling houses, arrested people in parked cars and generally carried on a pogrom of harassment. Most of their arrests (or kidnappings) never made it to court simply because their badges were completely bogus. These “constables” were also never arrested for kidnapping, false arrest, or impersonating a law enforcement officer.

But then, as now, rank had its privileges. Governor Ed Jackson's wife was treated by a doctor with alcohol. Attorney-General Arthur Gilliom treated his wife and 3 sons with alcohol. The head of the Anti-Saloon League, Reverend Shumaker, was found to have a daily elixer, Busho Tonic, that was 23% alcohol, He also treated his wife and 1 son with Busho.

In the end of this, Reverend Shumaker was convicted of libeling Attorney General Gilliom and was pardoned by Jackson.

The Indiana State Medical Association petitioned for a repeal of the non-medical use portion of the Wright Bone-Dry Law and it was removed in March, 1933, just in time for repeal.

There were some positive aspects of Prohibition. Drinking overall dropped by 30% and deaths by cirrhosis dropped by 64% by 1929.

PROHIBITION BUSINESSES

Various companies around the state saw their business drying up since producers didn't need their wares. Uhl Pottery of Huntingburg had made beverage glasses, Root Glass of Terre Haute had made bottles, and dozens of large cooperages shut down.

Root Glass, by the way, did just fine because their design for a new Coca Cola bottle was accepted, resulting in those fluted bottles we are still familiar with rather than the straight-sided bottle Pepsi uses.

We also need to look at how some producers tried to stay in business during prohibition. Many tried to make soda pop (orange, grape and lime were popular). Some made “near beer” a non-alcoholic beverage that tasted somewhat like beer, maybe; I haven't tried it. Others made various food products from grain and a few made “baking yeast” or Malt Syrup which actually came with instructions to not introduce yeast to the syrup for fear it would turn it into beer. Obviously this was a popular product but the results evidently produced poor results.

Others hooked up with mob interests such as George Remus in Cincinnati who transported booze mainly to Chicago under a federal permit to make medicinal alcohol. His venture became Fleischmann which, yes, makes yeast and also makes “neutral grain spirits” sold to what are called rectifiers who add flavorings, bottle, and put out boutique brands. Remus himself went to jail for killing his wife, Imogene, in 1927 after she testified against him in a trial for violations of the Volsted Act and mobster activities. She had sold their home and took off with the money.

It's not easy to document these times because no records were kept, bootlegging being illegal and all. Sort of like the Underground Railroad which is now claimed by many old farms, barns, churches, warehouses.

• The Hammond Distillery sold their raw whisky to George Remus until at least 1923.
• The Lawrenceburg and Aurora distilleries were effectively run for the benefit of Remus.
• The Hoham brewery in Ply mouth was sold and the new owners built a vary large “fruit cellar” that turned into a brewery, speakeasy, beer garden, bordello, and inn. They were raided in 1928 arresting 35 customers. The place was padlocked for one year. The family says the fruit cellar was used in the Underground Railroad and notables including Zeppo Marx were caught in that raid.
• Muessel Brothers in South Bend sold their beer to the Detroit mob of Giacamo Tocco and Al Epstein.. This same organization fixed up the selling of Muessel to Drewrys of Canada in 1936.
• T.M. Norton of Anderson made some full-strength (5%) beer along with their soft drinks and ice products. Two truck drivers were arrested while taking 29 barrels of beer to Cincinnati – probably George Remus but the court records don't say.
• Paul Reising Brewing of New Albany made Hop-O and Hop-O Dark near beers, but some batches had as much as 7% alcohol. In 1922 three men from Reising were caught by T-Men who hid in a closet listening to price negotiations and logistics with a Louisville distributor. Then-president Michael Schrick lost his job but was then named the Senatorial campaign manager for James Watson.

REPEAL OF PROHIBITION

Gosh, this wasn't even a contest. The U.S. Congress passed the 21^st Amendment by 63-21 and 289-121. In just 9 months it was fully ratified and went into effect.

Once the 21^st was ratified, the Indiana legislature immediately repealed the Wright Bone Dry Law and Governor Paul McNutt emptied 982 people from the jails.

Continuing restrictions were many. Lots of favoritism went on (or buying votes, if you will). A fight with Michigan changed national law. It went this way:

Distributors in Indiana got a new law to deal with in 1933. “Imported beer” (being from another state) required a separate $1,500 license and a $10,000 bond. Only 13 were sold. Michigan countered with a tax on beer from Indiana. Their law got upheld by the U.S. Supreme Court as the 21^st amendment said states had full control on liquor. Missouri and Ohio got into the act with taxes (port of entry fees) on Indiana beer and finely an accord was reached for everyone to kill all those self-defeating regulations in 1938.

1939 – The Alcoholic Beverage Commission was formed to establish rules for alcohol. They raised the excise tax on beer to 4¢ per gallon This and license permit costs, of course, are raised quite often.

1940 – Terre Haute Brewing Company put brewing dates on their labels. This is the first anywhere. Note this isn't an expiration date. Nor is it a legal mandate.

1941 – Tavern licenses were limited to one for every 1,000 people in the county – except for Lake County next to Chicago where it was 1 for every 500.

1947 – Taverns have to serve food in order to serve alcohol. This is still basically on the books.

1948 – Sales were banned on the day after each holiday.

There were 11 Hoosier breweries in 1950. This tumbled due to mergers, wider transportation and mainly television advertising, especially those aimed at sports fans.) Only 4 breweries were still open 1960. The count went down to 2 in 1980 but is now 104.

Now let's talk about the rules you people put into effect that allowed this tremendous growth. Thank you and your predecessors from about 80% of us Hoosiers for the sensible laws that are now in the books.

1963 – Cold beer and wine were allowed to be sold in liquor stores. This continues to the present day and while groceries may not have chilled product, taverns and breweries may also sell cold beer to go.

1973 – State liquor laws were completely rewritten which put everything together as Article Title 7.1 If you are interested in seeing the latest iteration of the law, go to the Indiana Government web site at iga.in.gov.

1976 – Approval of the artwork on wine and beer labels was necessary. This is now done basically by the Feds's Bureau of Alcohol, Tobacco, Firearms and Explosives – why have duplicate effort?

1979 – The ABC allowed exclusive territories for liquor distributors. This let the more powerful distributors slice up the state into duchies and effectively set up monopolies. It became known as the “Beer Baron” rule.

1979 – Permits became required for bartenders and store clerks. The rule requiring a permit for dancing was abolished - except for nude dancing, which continued to be prohibited.

1984 – MADD got the 21 year old drinking age passed in every state. Younger than that and you couldn't buy alcohol or display it in public – not a total ban.This or the state lost 10% of its highway funding. The result was country wide of course with Indiana being one of 7 that put in a full drinking ban.

1984 – Package stores were allowed to give wine samples.

1984 – A lawsuit allowed sales of warm beer and wine at grocery stores and gas stations.

1988 – The familiar health warning on bottles and cans was instituted at the Federal leval. No studies have been made on whether this has ever been read.

1989 – A repeal of the “Beer Baron” rule was killed by Evan Bayh's veto. In 1979 there were 200 distributors; by 1989 there were only 80.

1994 – Drug stores were allowed to sell liquor.

2001 – Governor Frank O'Bannon let the Beer Baron rule die. Now distributors usually set up territories by contract with the producers and importers.

1999 – Mail-order purchase of beer and wine was allowed by a federal court decision. The state appealed to the U.S. Supreme Court which confirmed the lower court.

2004 – Grocery stores may sell alcohol (warm).

2005 – Liquor stores can provide samples to customers.

2010 – Photo ID must be produced to buy alcohol.

2011 – Photo ID must be produced to buy alcohol unless the purchaser appears to be older than 40 years of age. (Most grocery stores and some liquor stores still check ID.)

2014 – As of 2014 but breweries could only sell directly to pubs and stores if they made less than 30,000 barrels of beer per year. Bigger than that and they must use a distributor, can't have a brewpub, and cannot sell or give away samples at their place of business without providing food. Luckily food trucks do count as food so many places work with the temporary trucks for sausages, pizza, and other food availability, often on a regular weekly schedule. Better than a can of soup on a hot plate as in the old days.

2015 – There were three breweries that bumped up against the 30,000 barrel limit: Three Floyds in Munster, Upland in Bloomington, and Sun King in Indianapolis. A bill this year expanded this limit to 90,000 barrels. Thank you.

Thanks for coming. You'll find more at indianaprohibition.com or in my book at Amazon.