China’s republican revolution overthrowing the Quing Dynasty and restoring antiopium prohibition in 1911-12 caused a massive opiate glut. Withdrawal sickness, often medicated with alcohol as a palliative, blurred the distinction between opiate addiction and fascination with alcohol before and during the World War. The war itself was sparked by the glut in opium-producing Balkan nations and morphine-refining Austria-Hungary, Germany, France and England as pressure mounted to ratify the Hague convention. Mr Dooley, a humorous political philosopher quoted by Milton Friedman, reported surplus morphine being added to distilled spirits during the depression begun in 1907. (link)
After the Great War, the Hague antiopium convention set afoot in 1909 was finally ratified at bayonet-point as part of the Armistice and Treaty of Versailles. With President Wilson’s corporate income tax inspections as public records announcement of July 28, 1914, wheat dropped and many stock markets closed. A sharp panic and depression attended federal enforcement of Volstead prohibition beginning the night of January 16th, as coercion and banking problems spread across These States.
Canada had experienced a similar narcotic shock, and many provinces had adopted prohibition laws after the pattern of U.S. States during wartime conditions. A black market busily reallocated supply and demand, and with the return to peacetime normalcy much churchly legislation hastily enacted in the heat of war revealed itself a financial burden.
Within a few years most provinces repealed Prohibition: Quebec, British Columbia and the Yukon in 1921, Manitoba in 1923, Alberta in 1924, Saskatchewan in 1925, New Brunswick and Ontario in 1927 and 1929, and Nova Scotia in 1930. Iceland modified its dry law to admit Spanish wine, and even Russia legalized beer and vodka as violent anarchy alternated with deliberate mass murder.
A similar trend occurred in the USA, beginning with repeal of New York’s Mullen-Gage Act, to which womanizing druggie President Harding retorted that a “small and a greatly mistaken minority” imagined prohibition would be repealed. Yet Turkish authorities were busily repealing curbs on narcotics in April 1923. The 1924 Democratic platform expressed shock and dismay at the way narcotics had replaced beer.
Get the complete story in Prohibition and The Crash on Amazon Kindle in two languages. After this you’ll be able to explain to economists exactly how fanaticism and loss of freedom wrecked the U.S. economy.