Straight Whiskey And Dirty Politics

In nan early 20th century, America was buzzing pinch Progressive Era reforms aimed astatine taming nan excesses of industrialization. One landmark was nan Pure Food and Drugs Act of 1906, hailed arsenic a triumph for user safety. It banned venomous ingredients successful nutrient and drink, required meticulous labeling, and cracked down connected imitations. But erstwhile it came to whiskey, was it genuinely astir protecting nan nationalist from deadly adulterants? Or was it a classical lawsuit of soiled politics, wherever typical interests usage authorities powerfulness to disadvantage competitors?

Economists person agelong debated nan origins of regulation done 2 lenses: nationalist liking mentation and public choice theory. Public liking mentation sees regularisation arsenic a noble consequence to marketplace failures for illustration asymmetric information, wherever consumers don’t person nan expertise to spot hidden dangers. Public prime theory, pioneered by scholars for illustration James Buchanan and Gordon Tullock, flips nan script: regulations often look from rent seeking, wherever powerful manufacture groups lobby for rules that boost their profits astatine nan disbursal of consumers and competitors. Oftentimes, rent seeking is astir successful erstwhile location is astatine slightest a semblance of a nationalist liking interest to bolster nan statement for regularisation among those hoping to style it.

In my caller insubstantial successful Public Choice, coauthored pinch Macy Scheck, “Examining nan Public Interest Rationale for Regulating Whiskey pinch nan Pure Food and Drugs Act,”  we research a lawsuit successful which nan humanities grounds leans heavy toward nan mentation offered by nationalist prime theory. Straight whiskey distillers, who property their spirits successful barrels for flavor, pushed for regulations targeting “rectifiers,” who flavored neutral spirits to mimic aged whiskey much cheaply. The rectifiers were accused of lacing their products pinch poisons for illustration arsenic, strychnine, and wood alcohol. If true, nan regularisation was a lifesaver. But was it?

Whiskey depletion boomed successful nan decades earlier 1906, without national oversight. Sales of rectified whiskey were estimated astatine 50–90% of nan market. From 1886 to 1913, U.S. tone depletion (mostly whiskey) roseate steadily, dipping only during nan 1893–1897 depression. If rectifiers were routinely poisoning customers, you’d expect markets to illness arsenic connection spread, an illustration of Akerlof’s “market for lemons” successful action. No specified illness occurred. 

Chemical tests from nan era show a akin story. A broad hunt of humanities newspapers uncovered 25 tests of whiskey samples betwixt 1850 and 1906. Poisons turned up infrequently.  Some alarming results came from dubious sources, for illustration temperance activists. One chemist, Hiram Cox, a prohibitionist lecturer, claimed to find strychnine and arsenic galore—but contemporaries debunked his methods arsenic sloppy and biased.

Trade books for rectifiers, which contained recipes, uncover moreover little malice. These manuals, aimed astatine professionals blending spirits, seldom database poisons. When poisons did appear, their usage was successful accordance pinch nan technological and aesculapian knowledge of nan time. Many look authors explicitly avoided known toxins, noting it was much profitable to support customers live and coming back.

We examined location look books for medicine and food. We recovered that nan fistful of vulnerable substances that were included successful whiskey recipes were often recommended successful location aesculapian recipes for everything from toothaches to humor disorders. This suggests people, including regulators, did not cognize of their threat astatine that time. 

Strychnine was recovered successful niche underground markets wherever a mini number of thrill-seekers demanded its amphetamine-like buzz, aliases successful prohibition states wherever bootleggers had nary viable alternatives. But rectifiers avoided it; it was costly and bitter.

What astir reported deaths and poisonings? That is our last portion of evidence. Newspapers of nan time loved sensational stories specified arsenic murders aliases suicides. Yet a keyword hunt for whiskey-linked fatalities from 1850–1906 yielded slim pickings extracurricular of intentional acts aliases bootleg mishaps. Wood alcohol, which was listed successful nary recipes, caused nan astir issues, but often successful isolated cases, for illustration a 1900 New York saloon debacle wherever 22 died from a mislabeling. 

Overall, adulterated whiskey was hardly a superior information concern.

Harvey Wiley, nan USDA chemist who championed nan Pure Food and Drugs Act, admitted nether questioning that rectified ingredients weren’t inherently harmful—they conscionable weren’t “natural.” His existent motive? Rectified whiskey was a inexpensive competitor to consecutive stuff. Wiley’s correspondence, unearthed by historians Jack High and Clayton Coppin, shows consecutive distillers lobbying difficult and framing regularisation arsenic a civilized crusade while eyeing marketplace share. President Taft’s 1909 discuss allowed “blended whiskey” labels but reserved “straight” for nan premium, aged variety— a triumph for nan incumbents.

The lesson? Regulations are seldom nan merchandise of axenic altruism. As Bruce Yandle’s “Bootleggers and Baptists” exemplary explains, moralists (temperance advocates decrying poison) squad up pinch profiteers (straight distillers seeking barriers to entry) to walk laws that sound virtuous but service constrictive interests. The Pure Food and Drugs Act whitethorn person curbed immoderate existent abuses elsewhere, but for whiskey, it was much astir protecting producers than consumers. Cheers to that? Not quite.

Daniel J. Smith is nan Director of nan Political Economy Research Institute and Professor of Economics astatine nan Jones College of Business astatine Middle Tennessee State University. Dan is nan North American Co-Editor of The Review of Austrian Economics and nan Senior Fellow for Fiscal and Regulatory Policy astatine nan Beacon Center of Tennessee.