The Problem

In 1933, at the very end of the prohibition era, the difficulties of creating an alcohol control system seemed formidable. In the years before Constitutional prohibition in the United States, there had been little systematic control of the alcohol industry. The Eighteenth Amendment had not eliminated the business, but rather had profoundly altered its shape. Thus, in 1933 a sprawling illegal industry for producing and distributing alcoholic beverages was in place, composed of uncountable numbers of small independent distributors and producers, and some larger ones. For 14 years this industry had kept the United States we11 supplied with alcohol. The mass patronage of this illicit industry - and the political and economic implications of such a popular di6play of disrespect for law - was a major factor in convincing Rockefellet and other prominent supporters of prohibition to reverse field and press for repeal.

During prohibition the liquor business was wide open. In most cities and many towns, speakeasies closed when they wished or not at all, they sold whatever they wanted, to whomever they cater to, at whatever price they chose. They decorated as they wished and had a free hand in providing food and entertainment. Producers had complete control over the strength of their alcohol and the means of its manufacture, including the products that went into it. Neither producers nor distributors paid any taxes (except for payoffs to police and politicians) and they were not regulated by any government agency. During prohibition, the liquor industry was probably the freest large industry in America.

Alcohol control, on the other hand, was a highly coercive system. It was premised on government intervention into every aspect of the liquor business. Controversial issues such as whether food must be served, women admitted, music and games banned, bars and bar stools allowed, all had to be settled. The number, types, and locations of on and off-premise outlets and their hours of sale had to be determined. Producers had to be regulated to ensure that products were safe and of a uniform alcohol content. In order to eliminate untrustworthy or disreputable persons, both producers and distributors had to be screened, licensed, and made to pay taxes. Legal drinking had to be socially organized in a way that would not be an affront to the abstaining half of the population. Conversely, the control system could not make regulation so tight, or tax›s so high, that drinkers would prefer to patronize illicit bootleggers or speakeasies. Americans, after all, were by then quite used to disobeying 1iquor laws.

Prohibitionists had always argued that the liquor business was inherently unregulatable. The onus was now on reformers to show that this was not true, and that they could create structures to make the industry obey laws and yield taxes. The task, as expressed in the catchall title for alternatives to prohibition, was "liquor control" or "alcohol control" in the fullest sense of the term. In short, repeal posed an enormous problem of social engineering. Constructing alcohol control, in fact, involved problems of government regulation so large and complex as to make some of the classic Progressive-era reforms - regulating meatpacking, for example - seem paltry in comparison. Except for national‘ prohibition, postrepeal alcohol regulation is probably the most striking twentieth-century example of government power used directly to reshape both an entire industry and the way its products are consumed.

The Rockefeller Report

Prior to the passage of the Eighteenth Amendment, alcohol was regulated by cities, towns, and sometimes counties. State governments were rarely involved in regulating production or distribution. Prohibition then shifted control to the federal government. Postrepeal policy, however, made state governments chiefly responsible for devising and implementing a regulatory system. States could, and often did, then allow for considerable local option and variation.

By the end of the 1920s the Association Against the Prohibition Amendment had outlined some rough plans for alternatives to prohibition, but they had not been well worked out. The central principles of postprohibition alcohol control systems adopted by almost every state legislature were first fully laid out in a report sponsored by John D. Rockefeller, Jr. and issued in October 1933, shortly before repeal was ratified. Rockefeller’s long-time adviser, Raymond Fosdick, was the senior author. Fosdick supervised the group of attorneys and policy analysts, most of whom worked with or for the Institute of Public Administration - a Progressive Era policy institute in New York that Rockefeller had funded for a number of years. The report was issued in press releases to newspapers and magazines over several weeks. Finally the Rockefeller Report (as it was called at the time) was released as a book, Toward Liquor Control by Raymond Fosdick and Albert Scott (1933).

Although few at the time recognized it, Toward Liquor Control had taken as its basic conclusions virtually all of the central recommendations made 30 years earlier by another elite-sponsored alcohol policy group called the Committee of Fifty. The Committee of Fifty, which was staunchly antiprohibitionist, had produced five books on various aspects of the "alcohol problem" around the turn of the century. Fosdick and the other study members had read the Committee of Fifty’s reports and quoted them at length on the corruption and lawlessness resulting from earlier forms of local prohibition. The Rockefeller Report echoed the Committee of Fifty’s conclusion that the legitimacy of the law must be of primary concern in liquor regulation. Both reports agreed that the specific content of the law mattered less than that, the laws be obeyed. Both reports argued that alcohol regulation required a flexible system that could be continually monitored and adjusted. Further, both reports advised that, if at all possible, government should take over the selling of alcoholic beverages (Billings 1905; Levine 1983; Rumbarger 1989).

The specific plan for alcohol control suggested by Toward Liquor Control, and the Rockefeller Report’s most controversial proposal, was that each state take over as a public monopoly the retail sale for off premises consumption of spirits, wine, and beer above 3.2 percent alcohol. As Fosdick and Scott explained: "The primary task of the state Alcohol Authority would be the establishment of a chain of its own retail stores for the sale of the heavier alcoholic beverages by package only." This is the source of the term "package stores" still used today for liquor outlets in many states. The state-run outlets of Canadian provinces, and of Sweden, Norway, and Finland, were cited as working examples of such a plan. This quickly became known as the "monopoly plan" and at the time was usually called "the Rockefeller plan."

For those states not willing to establish government liquor stores, Fosdick and Scott proposed an alternative system: "regulation by license."

They cited England as the best example of a working license system. A single, nonpartisan board appointed by the Governor would have statewide authority to issue liquor licenses and regulate the industry. "Tied houses" would not be permitted; no retail establisha41ents could be owned directly by or under exclusive contract to a distiller or brewer.

Although it offered guidelines for a licensing system, Toward Liquor Control favored the monopoly plan. The possibility of increasing profits, they said, would encourage private businesses to sell more alcohol, to buy political influence and lax enforcement, and to violate laws. Rockefeller explained the chief advantage of government-owned liquor stores in his foreword to the book: "Only as the profit motive is eliminated is there any hope of controlling the liquor traffic in the interest of a decent society. To approach the problem from any other angle is only to tinker with it and to ensure failure." The irony of a Rockefeller warning about the dangers of the profit motive was not lost on observers in 1933. Rockefeller took such an anticapitalist position because, like others at the time, he had concluded, probably correctly, that government ownership brought greater powers to regulate and control behavior, and ensure obedience to the law. For both plans, Toward Liquor Control outlined a detailed set of matters over which the state agency would have jurisdiction. These included the power to acquire real estate and other capital by purchase, lease, or condemnation; determine and change prices at will; establish a system of personal identification of purchasers; issue permits for and regulate the use of beer and wine for off-premises consumption and for on-premises consumption in hotels, restaurants, clubs, railway dining cars, and passenger boats; require alcohol manufacturers and importers to report on quantities produced and shipped; regulate or eliminate alcohol beverage advertising; determine the internal design, visibility from the street, hours and days of sale, number and locations of alcohol outlets .

In January 1934 a model law based on the guidelines of Toward Liquor Control and written by the staff of the Institute for Public Administration was published as a supplement to the National Municipal Review. The Review was the official journal of the National Municipal League, another Progressive Era policy organization supported by the Rockefellers. The model law and other supporting documents were widely circulated to legislators throughout the country in the months following repeal. State legislators, faced with difficult political choices, and with little personal ex pertise in the complexities of liquor regulation, turned to the authoritative and virtually unchallenged plans of the Rockefeller commission and the National Municipal League. In a letter in the Rockefeller Archives, one of the model law’s authors estimated that the monopoly law was taken almost verbatim by 15 states, and the licensing law served as the text or draft for many more (Gulick 1977; Levine 1981S).

Alcohol Control in Operation

Postrepeal regulation transformed the alcohol beverage industry. Finland, the only other nation to have experimented with constitutional prohibition, had nationalized production of spirits. However, such proposals were not seriously discussed in the United States. Instead, production took the form of an oligopoly of relatively few corporations. By the end of the 1930s, four or five years after repeal, roughly four-fifths of all distilled liquor made in the United States was manufactured by four corporations. The beer industry, although more diverse nationally because beer required quick and local distribution, was monopolized by region of area. Regulatory agencies preferred to deal with a few large corporations - they were easier to police and to make agreements, with, and more likely to be concerned with keeping the image of the industry clean and respectable. This pattern of monopolization was not unique of course; most major American industries - steel, automobiles, soft drinks, chemicals, for example - were increasingly dominated by a few large corporations. (From at least the time of the National Recovery Act at the start of the New Deal, federal government policy often encouraged such concentration. The alcohol industry was exceptional only in how quickly many small producers were overtaken by a few dominant ones.)

Although production became oligopolistic, distribution was splintered and scattered. Perhaps the most important long-term innovation in postprohibition alcohol regulation was that it permitted the legal sale of alcohol at a wide variety of sites. Before prohibition, the saloon had been a single, all-purpose institution - there one drank beer, wine, or spirits, and there one purchased for off-premises consumption a bottle of spirits or a bucket of beer. After repeal, alcohol control created several different types of establishments to sell alcoholic beverages. In most states special stores were designated for selling distilled liquor and wine - often they could not sell any food at all, or even cigarettes. Beer, on the other hand, was made relatively widely available in bottles and cans - with grocery stores and small markets licensed to sell it. In other words, after prohibition, sale of bottled alcohol was increasingly separated from the public drinking place. This encouraged the privatization of drinking. Whether alone or with others, drinking became something more commonly done at home - where, it should be noted, drinking patterns were often moderated by family norms (see Zinberg 1984). By 1941, off-premises consumption accounted for the majority of alcohol sales (Hartison and Laine 1936; Kyvig 1979, 189).

The character of public drinking was significantly altered by these regulatory changes. A new class of licenses for on-premises consumption of beer only, or of beer and wine, was established and liberally issued to restaurants and cafeterias where eating moderated the character and effects of drinking. This separated the barroom selling distilled liquor and beer as a distinct institution. Many state alcohol control laws made provision for a local option whereby a county government could prohibit specific kinds of liquor selling within its borders. This option has been widely exercised. As late as 1973, of the 3,073 counties in the United States, 672 prohibited sales of distilled liquor by the drink for on-premises consumption, and 545 totally prohibited sales of distilled spirits (Alcohol Beverage Control Administration 1973).

Under alcohol control, all establishments licensed for on-premises consumption of spirits were specifically restricted in ways that shaped the cultural practice of drinking. In some areas, control laws attempted to mode-rate the effects of drinking by encouraging food consumption (just as hosts of cocktail parties served hors d’oeuvres). For example, spirit sales often were limited to bona fide restaurants with laws specifying how many feet of kitchen space and how many food preparation workers there must be. Most states established restrictions on the number of entrances and their locations (back entrances are usually prohibited); the times of day and days of the week when sales may occur; permissible decorations; degree of visibility of the interior from the street; numbers and uses of other rooms; distance of the establishment from churches, schools, and other alcohol outlets; whether customers may sit at a long bar - a counter in close proximity to the source of alcohol - or whether they must sit at tables and order drinks as one orders food; and the ratio of chair seating to bar seating.

The public character of drinkers’ comportment was also regulated. Many states, for example, prohibit dancing or live music except under special license. Most gambling or betting is prohibited, and other games are restricted as well. For many years, New York and other states did not allow barrooms to have pinball machines. Many states specifically ban the use of the word "saloon," others the use of the word "bar," and some forbid all words to indicate a drinking plac4. Until recently, most drinking establishments in California displayed only a name and a symbol: a tilted glass with a stirrer.

From a preprohibition or prohibition-era perspective, there are two surprising characteristics of postrepeal alcohol controls. First, most laws and regulations are obeyed. Almost all drinking places, for example, stop serving and collect glasses at the required hours; and they observe the regulations about tables, dancing, decorations, signs, entrances, and so on. By and large, this obedience has been relatively easily achieved through careful policing, coupled with the power to revoke or suspend licenses. Opera-ting a liquor-selling business is usually quite profitable compared to other kinds of retail establishments, so owners tend to guard their licenses care-fully. Minimum-age drinking laws constitute the one obvious exception to this regulatory success as well as being one of the few remaining forms of prohibition. Second, postrepeal alcohol regulation is usually not perceived as especially restrictive by customers. The many layers of laws and regulations are rarely noticed; most drinkers take them completely for granted.

A third, less surprising characteristic of postrepeal alcohol control is that policy has not been aimed specifically at maximizing what earlier reformers called "temperance" - meaning, above all, reducing habitual drunkenness or repeated heavy drinking. In his preface to Toward Liquor Control, Rockefeller maintained that such problems could not be effectively addressed by liquor regulation and that they would have to be taken up by other agencies as part of broader educational and health efforts. Since repeal, these tasks have been adopted by a number of independent and government groups, notably Alcoholics Anonymous and the National Council on Alcoholism, various state and local alcoholism agencies, and, since the early 1970s, the National Institute on Alcohol Abuse and Alcoholism. In recent years, some public health professionals have urged that the alcohol control system be used more self-consciously to reduce drinking and alcohol-related health problems. Such concerns have by and large been imposed on the system, however, and do not flow from its natural workings.

It is worth noting that whenever states propose adding public health concerns to the control system, the alcohol industry usually offers fierce op-.position. This is why Rockefeller pushed to eliminate the profit motive from alcohol sales, even while advocating private production. This is also why Finland chose to organize both hard liquor production and sale as a state monopoly. As a result, the Finnish alcohol industry is relatively less powerful than the American industry, and the Finns have found it easier to make public health a part of their postrepeal control system.

On the other hand, despite all its flaws, postrepeal alcohol control did succeed in turning consumption away from hard liquor and back toward beer. Further, alcohol control (coupled with the Depression and World War 11) did keep alcohol consumption below preprohibition levels. In fact, as noted earlier, it was not until 1970 that the total alcohol consumption level of the drinking-age population reached the levels of 1918.

In 1936 a second volume of the Rockefeller-sponsored Liquor Study Commission Report was issued. After Repeal. A Study of Liquor Control Administration (Harrison and Laine 1936) analyzed the results of liquor control after "a two-year trial," and described the most important changes and innovations in liquor administration instituted since repeal. The overall thrust of the report was that, with some understandable exceptions, alcohol control worked extremely well. Other observers at the time drew similar conclusions (Sheppard 1938; Shipman 1940). Legalizing alcohol and then regulating it had accomplished what most temperance and prohibition supporters claimed was impossible: alcohol moved from being a scandal, crisis, and constant front-page news story to something routine and manageable, a little-noticed thread in the fabric of American life. For over 50 years, alcohol control has quietly and effectively organized and managed the production, distribution, and sale of alcohol, as well as much of the social life associated with drinking.

The alcohol control system was and is coercive, although its coercion was not organized like that of prohibition. This coercion was designed with a certain pragmatic precision that continues to function effectively. Some prohibitionist critics observed at the time of repeal that this system was shaped around the preferences of drinkers and the alcohol industry (Garrison 1933). But as the Committee of Fifty had recommended at the turn of century, alcohol regulation was not designed to stop all drinking and eliminate the industry, but rather to promote "order, quiet and outward decency." This more modest goal has been largely achieved.

Despite frequent claims to the contrary, alcohol control has of course sought to legislate morality. It 4as not, however, sought to impose the morality of the nineteenth-century Victorian middle class, who took up the cudgel of temperance. Rather the alcohol control system legislates the more modern morality of the new business and professional middle class, of the corporate elite, and to some extent of the twentieth-century working class. Accordingly, unlike more stigmatized "vices" or "pleasures" - prostitution, gambling, and the use of marijuana, heroin, or cocaine - drinking has not been pushed by criminalization beyond the pale of normative and regulatory influence. Moreover, once it ceased to be outlawed, the alcohol industry was no longer dominated by unregulated, illicit entrepreneurs who shot at each other, developed organized crime syndicates, and paid off police and government officials. The leaders of the major alcohol industries are members of the economic establishment with an investment in maintaining order and obedience to law.

Now, over a half-century since prohibition, it is easy to forget that all this was the outcome of self-conscious public policy and not the "natural" result of market forces or national zeitgeist. The alcohol control system has worked sufficiently well that it usually goes unnoticed, even by students of prohibition or American history. For purposes of devising new drug policy options, however, it is important to remember that this particular system was the self-conscious creation of a political and economic elite with the power to institute what it regarded as good and necessary. The alcohol control system they devised is not especially democratic; it does not really address public health or social welfare concerns; and it has produced enormous profits for a handful of large corporations that continue to fight public health measures. However, it has achieved what its designers sought to do: regulate and administer the orderly and lawful distribution of alcoholic beverages in a way that creates little controversy (Bruun et al. 1975; Beauchamp 1981; Levine 1984).

Lessons from the Regulatory Regime

There are many different (even contradictory) lessons that may be drawn from the story of alcohol control in the United States. Two seem particu larly relevant for drug policy. First, although it may cut against the grain of our moral predisposition’s, drug control along the lines of alcohol control is a reasonable and practical policy option. Prohibitionists always claimed that alcohol was a specia1 substance that could never be regulated and sold like other commodities because it was so addicting and dangerous. However, as the last 55 years of alcohol control and the experiences of many other societies have shown, the prohibitionists were wrong. The experiences of drug policy in other nations, and the experiences of US pharmaceutical and drugstore regulation, suggest that most if not all psychoactive substances could be similarly regulated, sold, and used in a generally lawful and orderly fashion. It would mark a significant advance if the current US debate on drug policy could be moved beyond the question of whether such a system of legalized drug control is possible; it is. In-stead, we think debate should focus on whether a nonmoralistic assessment of the advantages and disadvantages of such a system make it desirable, and what different regulatory options might look like.

A workable system of drug control would have to be a flexible one, geared to local conditions, as Edward Brecher recommended 20 years ago in his landmark study Licit and Illicit Drugs (1972). The logic of such a flexible system was also out4ned 90 years ago by the Committee of Fifty. As with alcohol control, drug control could be implemented so as to re-duce substantially if not eliminate the illegal drug business and most of the crime, violence, and corruption it produces. Drug control with a public health orientation would also seek to encourage milder and weaker drugs and to make them available in safer forms accompanied by comprehensive education about risks, proper use, and less dangerous modes of ingestion. In other words, a public-health-oriented drug control regime would seek to reverse the tendencies that appear inherent under criminalization, where production, distribution, and consumption are pushed into deviant subcultures in which purity is not controlled, dosage is imprecise, and extreme modes of ingestion are the norm.

If a drug control system were designed according to rigorous public health criteria, then the experience of alcohol regulation suggests that, in the long tun, drug problems would probably not rise significantly above the levels now present under drug prohibition, and overall consumption might not rise either (see also Nadelmann 1989a). Similarly, if such a public health model of drug control were coupled with increased social services and employment for impoverished inner-city populations, then the abuse of drugs like heroin and cocaine might well be expected to decrease (Brecher 1972; Jonas 1990).

Having said this, it is incumbent upon us to point to a second lesson that may be inferred from the history of alcohol control: it will be no simple matter to design such a drug control system. It took a full-time, multiyear effort for the researchers and planners at the Institute of Public Administration to come up with a workable beginning blueprint for postprohibition alcohol control. Furthermore, this system has been constantly adjusted ever since. A post-drug-prohibition control system will require even more study, research, and careful planning, which in turn will requite a Rockefeller-like willingness to invest the necessary resources. Special commissions and policy study groups drawing on a wide range of expertise will be necessary, for it is unlikely that effective alternatives in drug policy can be designed by an individua1 scholar, however wise or visionary, in his or her spare time.

Useful lessons aside;, all this begs a rather big question: does the political will exist even to study seriously alternatives to the drug policies that have dominated our thinking throughout the twentieth century?