So what did the whole rum running adventure out of Canada’s West Coast ports amount to in the end? In its 1931 yearbook annual, the Canadian Merchant Service Guild included a glowing testimonial to the trade and commented on its significant contribution to the local economy: “Vancouver claims prominence in shipping on its grain and general traffic, but does not hold glaringly before the world its liquor traffic … While tooting no horns and clanking no cymbals on the subject, the native Vancouverite will take no back seat from any rival rum-running centre. Its distilleries and breweries, its concentration and extracts, its fine corn products and rice distillations and fermentations continue to ooze out to go toward supplying any thirsty market with the cup that cheers … Since rum-running became an industry and Vancouver took its place as a centre of material supply and executive administration, perhaps a million cases of whisky have passed from the Vancouver rum fleet to western American consumers, through the hands of United States boot-leggers, who buy their supplies from the Canadian liquor fleet … Strange as it may seem, throughout the ten years that this traffic has been conducted from Vancouver there has been little disorder, but rare hi-jacking, and only one incident of major violence.”
While the liquor export trade did indeed revive the Port of Vancouver and the West Coast economy, Stephen Schneider, author of Iced: The Story of Organized Crime in Canada, had a more measured take on the impact it had on the nation as a whole, both economically and politically. He pointed out that there was indeed a serious downside to the business and that the enormous profits that Prohibition made possible ended up creating what soon became history’s single largest illegal market. If anything, once liquor was outlawed, it increased its desirability and in order to slacken the thirst of millions of Americans, Canada became a smuggler’s paradise where bootlegging and rum running became nationwide industries. According to a US Coast Guard intelligence report, it was estimated that only 20 percent of the liquor produced in Canada was actually drunk in the country, while the other 80 percent found its way across the line into the United States.
In the early years, Canadian rum running interests were importing the bulk of their stock from overseas. According to the Dominion Bureau of Statistics, between 1924 and 1929 the value of liquor imports into Canada grew from $19,123,627 to $48,844,111. Still, Canadian producers were quick to realize that greater profits could be made producing liquor domestically and then exporting into the US market. The trade proved so economically rewarding that it led to the transformation of Canadian distilleries and breweries into some of the largest and most profitable liquor enterprises in the world. By 1927, there were eighty-three breweries and twenty-three distilleries operating in Canada, all licensed by the federal government. As Stephen Schneider pointed out, “The palms of government officials would be liberally greased, leading to an epidemic of corruption that to this day is unparalleled in Canadian history.” Indeed, the corruption was so endemic that it led to the customs scandal of 1926, which brought down the Mackenzie King government.
Both the federal and provincial governments reaped substantial financial windfalls and benefited from a favourable balance of trade with the US by looking the other way throughout what would be best termed the Volstead prosperity years. Stephen Schneider’s diligent research revealed that with their monopoly over liquor sales, annual revenues accruing to provincial governments from taxes collected on liquor sales and licencing fees for export warehouses increased from $3,837,000 to $22,755,000 from 1920 through to 1928. And, according to an article in Maclean’s magazine in 1932, it was estimated that the provincial governments accrued a total of $152 million in liquor sales and taxes between 1922 and 1932, while the federal government reaped some $399 million.
Overall, Prohibition provided an excellent study with its curious juxtaposition of two nations sharing a border where a consumer product in particularly high demand is illegal on one side and legal on the other. In Canada, supplying liquor to the American market during Prohibition revived a flagging economy that was immersed in a postwar recession. Besides the economic benefits, it provided gainful employment for thousands, from all those working throughout the country’s breweries and distilleries to those crewing on hundreds of boats and ships off the coasts of North America, in the Great Lakes as well as the Caribbean. But there was a major cost to all this economic growth. It helped to leaven and build organized crime into what remains today, where an often violent drug trade continues to thrive out on the streets of communities throughout Canada and the US. Hardly a week goes by in British Columbia without the local media running a story of another drive-by shooting in the Lower Mainland accompanied with photos of local gang members. Meanwhile farther south, some have suggested the incredibly profitable drug cartels transformed Mexico and Colombia into what might be best termed failed states.
As Stephen Schneider noted, Prohibition taught the criminal element an invaluable lesson: that there was more money to be made satisfying the vices of a receptive public, since it often meant there were no victims to complain to legal authorities. A 1929 article in Canadian Forum magazine explained how Prohibition gave a new rallying point and coherence to the criminal element. “There is a demand to be satisfied, and the legal sources have been stopped. The result is an illicit trade that has reached the basis of an established industry. But those engaged in it have to face competition, often accompanied by violent methods, and they cannot appeal to the protection of the law. So the trade has built up its protective system and in many cases its own legal system as well. It has acknowledged district heads, it has its own courts, attorneys, judges, it has its own armed forces; and the court of gangland is more binding on members, and its breach is more severely avenged, than the laws of civil society in which the gang exists.”
To this day, the Noble Experiment is remembered as both a farce, and more importantly, a dismal failure. If anything, it was a time when people were drinking more alcohol and really enjoying it. Prohibition put the roar in the Roaring Twenties, those glamourous boozy years of rakish mobsters, flapper girls and crowded speakeasies. Even those who would otherwise never have considered deliberately breaking the law were simply ignoring the unpopular legislation in order to drink and have a good time. Still, the cost to American society was far more damaging than in Canada where it was legal, and by the late 1920s much of the American public were of the mind that the cure was worse than the disease. Once liquor crossed the line into the US, black market capitalism took over. Here the importing, marketing, sales and delivery were often left in the hands of the big-shot criminal element such as Chicago’s infamous Al Capone and his charming bunch of gun-toting gangsters, with no rewards accruing to the nation’s civic, state or federal governments. If anything, the costs of the belated and generally futile attempts to enforce the Noble Experiment were a drain on public treasuries. But once Franklin Delano Roosevelt and the Democrats came to power in the midst of the Great Depression, they were of the mind that after a flow of legal liquor was well underway, taxes on the commodity would swell government coffers. Indeed, the new source of funds helped to finance the New Deal, a series of programs initiated by the government to provide relief to the millions of unemployed and stimulate recovery of the American economy.
Meanwhile a similar situation is being played out today with the legalization of marijuana in a number of US states, where the number of overdoses resulting from the ingestion of nasty, toxic drugs, in particular opioids, consequently dropped soon after. Thankfully, Canada’s federal government caught on and got with the program and legalized pot throughout the nation in 2018. As proved to be the case with liquor, as long as a popular consumer product remains illegal, it continues to be a major drag on the public purse. A 2002 report by Canada’s Senate determined that the annual cost for law enforcement and the justice system was somewhere between three to five hundred million dollars, a futile attempt to curtail the use and sale of the recreational drug. While marijuana is a relatively safe and harmless intoxicant, perhaps it’s time to re-examine all of our drug policies and laws, especially with the very serious opioid-fentanyl crisis underway, which has spread throughout North America.
Despite the fact that marijuana has been legalized, we are still a long way away from solving our drug problems. As long as there remain exceptional rewards to be reaped through the production and sale of other far more dangerous and addictive intoxicants, there will always be certain individuals who are more than eager to step forward to meet the demand. Of course, with hard drugs continuing to be illegal, the trade has evolved into a particularly violent one, much like Chicago throughout the Prohibition years.
Still, there is another reason prohibition only leads to greater costs to be borne by society stemming from drug use, and opium provides a good example. During the nineteenth century, Great Britain tried to stop the importation of the drug from China, which resulted in a trade war between the two countries after the transportation of opium was restricted. This only led to the production of heroin, simply because it was far easier to conceal, transport and thereby avoid detection once morphine was extracted from dried poppies and packaged up in much smaller bundles. And today we have fentanyl, which is a thousand times more potent than morphine, with grains that are minuscule and next to impossible to detect.
It is most unfortunate that we in North America never took a serious look back at what went down throughout the 1920s and early ’30s and realized that Prohibition was a failed experiment and outright disaster. Still, there is one nation that has been proactive and realized that banning popular as well as addictive intoxicants simply doesn’t work. Back in 2001, Portugal decriminalized the possession and use of small quantities of drugs—pot, cocaine, heroin, you name it—and chose to treat the problem as a public health issue, not a criminal one. And the result? The small nation’s drug-induced death rate subsequently plummeted to five times lower than the European Union average. That being said, more governments should consider the fact that Prohibition in the United States in the last century did society a great favour by providing us with one of history’s greatest lessons.