Rockefeller, taxes, and alcohol in the early 1930s

Why did John D. Rockefeller, Jr., look for safe ways to deal with alcohol, and so commission the study, “Toward Liquor Control,” that recommended state monopoly sales?

My view, which I tweeted, is: “Rockefeller liked but couldn’t maintain alcohol Prohibition; faced reality with retreat to state liquor stores.”

My friend Kevin Sabet replied, “Actually, Rockefeller reversed support of alcohol Prohibition because of promise of lower corp tax. Didn’t work out!”

I think he is wrong. Many people did reverse support of alcohol Prohibition because of the promise of lower corporate and individual taxes. I think Kevin confuses Rockefeller with Pierre DuPont, who thought that after repeal of Prohibition, “The income tax would not be necessary in the future.” Daniel Okrent, Last Call, page 333.

But I can’t detect greed or self-interest in Rockefeller’s interest in the alcohol question.  In any event, the structure of the alcohol industry, which is the issue I urge Kevin to consider rather than ignore, is irrelevant to federal alcohol taxation.

Here are more quotes from Last Call (my research consisted mostly of looking up Rockefeller in the index, so maybe I’m missing some evidence of self-interest):

Early on: “improve-the-masses progressives like John D. Rockefeller, Jr. . . ., who saw Prohibition as a logical undertaking for activist government” 233

In 1926, Rockefeller stopped contributing to the American Saloon League because it wanted “mandatory prison sentences for Volstead violators.” 300

“Rockefeller’s June 6, 1932, abandonment of the drys was . . . motivated, he said, by the ‘colossal scale’ of criminal activity.” 350-51

And here are quotes from Rockefeller himself, in the Foreword to Toward Liquor Control, the study he commissioned:

“I was born a teetotaler and I have been a teetotaler on principle all my life. Neither my father nor his father ever tasted a drop of intoxicating liquor. I could hope that the same might be true of my children and their children. It is my earnest conviction that total abstinence is the wisest, best, and safest position for both the individual and society. But the regrettable failure of the Eighteenth Amendment has demonstrated the fact that the majority of the people of this country are not yet ready for total abstinence, at least when it is attempted through legal coercion. The next best thing—many people think it a better thing—is temperance. Therefore, as I sought to support total abstinence when its achievement seemed possible, so now, and with equal vigor, I would support temperance.

“In the attempt to bring about total abstinence through prohibition, an evil even greater than intemperance resulted—namely, a nation-wide disregard for law, with all the attendant abuses that followed in its train. That this intolerable situation should be done away with has seemed to me even more important for the moment than the promotion of temperance. It was for that reason that I took a position more than a year ago in favor of the repeal of the Eighteenth Amendment. But with repeal the problem is far from solved.

. . .

A “principle which the report develops is that 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 insure failure. This point cannot be too heavily stressed.”

+++

Quick googling turns up this faint hint of support for Kevin’s position:  “JDR Jr.’s public statements and private correspondence do not mention any of these [financial] concerns, but it is highly probable that he was influenced by them at least indirectly.”  Ranjit S. Dighe, Business Support for Prohibition and Its Repeal, http://www.rockarch.org/publications/resrep/dighe.pdf

 

 

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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