I’ve been seeing a lot of posts expressing disappointment around order cancellations and the Pennsylvania Liquor Control Board’s inability to meet the expectations of customers looking to buy whiskey. Well, folks, welcome to the last 90 years. The whiskey boom is a fairly recent phenomenon, but the PLCB has always been awful. Its corrupt and awful system is just new…to you.
The very foundations of the system were corrupt in 1933 when the first state store was opened to the public, so it’s no wonder that Pennsylvania has never managed to “right the ship” over the last century. The idea was always to discourage the customer and promote temperance. There’s nothing wrong with temperance, but those ideals were chucked out the window almost immediately in favor of profit for the state. Which, perhaps unsurprisingly, went against one of Governor Pinchot’s 5 main arguments for his state store system.
Pinchot’s 5 cardinal points for his plan for Pennsylvania were:
1. The Saloon Must Not Be Allowed to Come Back. (Nope.)
2. Liquor Must Be Kept Entirely Out of Politics. (Nope.)
3. Judges Must Not Be Forced into Liquor Politics. (Nope. Lots of articles on this)
4. Liquor Must Not Be Sold Without Restraint. (Ever been to a state store?)
5. Bootlegging Must Be Made Unprofitable. (Not exactly.)
Governor Pinchot had a moral imperative. And good for him! But the country had just learned its lesson about telling Americans they weren’t adult enough to handle their own purchasing decisions, hadn’t it? Pinchot never got the memo, though, and was determined to enforce his will onto Pennsylvanians. But just like every other politician before and during Prohibition, he was not equipped to deal with the powerful liquor companies that knew their industry far better than anyone in government and knew how to flex their muscles far better than Pinchot ever could. The first time Pennsylvania’s liquor store shelves were stocked in the early 1930s, it was with whiskey the state was forced to purchase.
Once the repeal of Prohibition became an inevitability, Governor Pinchot began advocating for a floor tax of $2 per gallon on Pennsylvania’s remaining whiskey stocks. This “floor tax” would call upon the distillery and warehouse owners in Pennsylvania to pay at least $8 million in taxes within days of Pinchot’s proposed state store bill being passed. National Distillers retaliated by shutting down production at their active distilleries (Large and Overholt Distilleries) immediately and furloughing nearly 600 workers. Schenley, National Distillers (ND), and Philadelphia’s Continental Distilling Co. threatened to pull their operations from the state entirely. A month of contentious negotiations between the politicians and distillery owners finally resulted in an agreement. The distillery owners allowed Pinchot to save face, but they had their way in the end. Instead of demanding the distillers pay the floor tax immediately, the state agreed to purchase from the distillers the value equivalent of the floor tax’s expected revenue in spirits. The distillers agreed to his deal and resumed operations. Pinchot swore that his decision was tactical, but it was obvious to everyone that he was outmaneuvered.
Pennsylvania’s newly established Liquor Control Board, which was preparing to purchase stock for its state stores, would use the liquor acquired during these negotiations to stock the shelves of its newly built “state stores.” The $12,000,000 expected to be gained in liquor taxes through the sale of these products would, they believed, be returned to the public.
“The price to the consumer will be substantially less than the prices now prevailing”, a board representative declared to the Daily Courier in Connellsville, Pa. “This settlement insures payment into the general fund, prior to the end of the year, of approximately $12,000,000 of floor tax on whiskey alone.”
The settlement did not ensure payment, but it did ensure that the state store shelves were stocked with liquor- immediately.
The common thread connecting Pinchot’s plan and the manipulations by the big distilling companies, both of which enabled the state store system, was a shared interest in reducing the likelihood that Pennsylvania would return to its “pre-Prohibition” status as a competitive distilling state. (He did such a good job at keeping out new distilling interests that when a modern distiller wanted to apply for a distiller’s license in 2006 at the beginning of the modern whiskey boom, the PLCB didn’t even know how to do that! The distiller had to draw up his own paperwork!) Pinchot didn’t want a return to a place where liquor firms held too much power over government, so he made a deal to allow the companies with too much power to remain the “devil he knows.” Seton Porter, Louis Rosenstiel, Si Neuman, and a handful of other company owners controlled almost all the liquor in the country! Perhaps it was better, in Pinchot’s mind, to allow a small number of distilleries to exist in Pennsylvania and purchase everything necessary for the state stores from a handful of sources outside of the state. The “Big Four” were happy to help keep Pennsylvania’s distilling industry in check while maintaining the status quo. Unable to compete with the bigger industry leaders, Pennsylvania’s distilleries slowly disappeared until none remained.
(To read more about how Pennsylvania’s Governor Pinchot’s pro-temperance mindset helped to establish the PA state store system in 1933, skip to “reason #5” in this blog post. )
Does any of this sound familiar? If you go to a liquor store in Pennsylvania, do you find what you want? Historically, the PLCB has never had any desire to cater to the customer. It was never a part of the business plan to please the citizens of Pennsylvania. To be clear, I’m NOT talking about the people that work for the state stores. They are doing their best. I’m talking about the whole monopolistic system and fact that Prohibition ended 90 years ago, but we’re still being asked to get what we get and to not get upset. People get serious about their wine and whiskey. They should be able to go into a store and deal with a shop owner. If that shop doesn’t suit their needs, they should be able to go to another shop that will. A state monopoly will have stores that stock different items, but they are all purchased and managed by the same state-run organization. The folks in Pittsburgh and Philadelphia are always going to get more. But both those cities are close enough to other states to leave the state and find what they want. The state will never put its own local distillers at an advantage over their biggest clients. As one of the largest buyers of liquor in the country, the PLCB has obligations to their big corporate “partners”, not to the businessmen and women starting distilleries next door. Pennsylvania was the birthplace of American whiskey and was just as famous for its rye whiskey as Kentucky is for its bourbon. While the PLCB exists, and while the status quo remains largely unchanged, we will continue to live in the shadow of Prohibition.