Economists have long been critical of Franklin D. Roosevelt’s New Deal. And rightly so. A plethora of recent works by David Beito (The New Deal’s War on the Bill of Rights), Amity Shlaes (New Deal Rebels), and Robert Wright (FDR’s Long New Deal: A Public Choice Perspective), as well as a forthcoming book by George Selgin (False Dawn: The New Deal and the Promise of Recovery, 1933–1947), expertly extend the narrative that many aspects of the New Deal were not just destructive affronts on liberty, but they also worsened the Great Depression. 

But not everything that Roosevelt touched turned to mud. One New Deal policy that even the staunchest FDR critic can get behind was also one of the earliest. On March 13, 1933, just nine days after he took office, Roosevelt asked Congress to declare beer non-intoxicating.  

The United States had been under the 18th Amendment’s prohibition of “intoxicating liquors” since 1920. Under the Volstead Act, Congress had set the threshold for what was considered intoxicating at 0.5 percent alcohol. But this limit could be amended by legislative fiat, thus allowing beer.  

Roosevelt’s rationale was purely economic. With 13 million Americans out of work, beer’s return would create not just employment for the brewer, but also the server, the delivery truck driver, the makers of glass bottles, steel kegs, wooden barrels, refrigeration equipment, and all the other various goods and services tied to beer.  

Congress immediately took up the “beer bill” and FDR signed the Prohibition modification bill on March 22. Beer up to 3.2 percent alcohol by weight was set to become legal fifteen days later.  

Every part of the supply chain went into frenetic action. The 150 or so breweries that had squeaked through Prohibition by making dealcoholized beer quickly brought their facilities back to full throttle. Hundreds of other breweries, which had sat idle for years, immediately undertook massive rehabilitations. More than 500 breweries were selling 3.2 beer by September and the number of active breweries approached 700 by the summer of 1934.   

April 7, 1933 has been called the greatest beer event in American history — contemporaries compared it to ten New Year’s Eve’s, Mardi Gras, and the Fourth of July all coming together in one enchanted evening. Upon the stroke of midnight, the sounds of whistles, horns, bells, and other noisemaking devices filled the nation’s city centers, and they continued for hours.  National Beer Day is still celebrated on April 7.

Many Americans gathered at the nation’s breweries — 30,000 at Anheuser-Busch alone — to cheer on the beer truck drivers as they left on their midnight runs to make deliveries to nearby watering holes. The lines at restaurants and clubs spilled out to the streets for hours while citizens stood arm in arm belting out drinking songs.  

Over the following days, newspapers around the nation showed pictures of smiling faces lifting steins and toasting to the goodness of life. They quoted merchant after merchant reporting their best business in years. Headlines shouted of the “Jingle of Coins With Gurgle of Legalized Beer,” “Beer Flow Seen Already Bringing Economic Benefit,” and “Beer and Prosperity.”  

Indeed, the economy began to buzz as the nation kicked into an economic gear not seen before nor since. Between March and July 1933 manufacturing output jumped 78 percent, production of durable goods surged nearly 200 percent, the Dow Jones Industrial Average rose 71 percent, and around three million Americans went back to work.    

Keynesian Economists today attribute the 1933 recovery to “Great Expectations.” FDR’s fireside chats reassured the troubled nation as he signaled of running future deficits and unleashing the Fed to expand the money supply. Neither the actual money supply nor government spending changed much during the spring recovery — importantly the New Deal’s multitude of public works and relief agencies did not begin until late 1933 and 1934 — so rising expectations seems the most viable candidate for the upswing. 

Still, the “Animal Spirits” story of 1933 is missing an obvious deregulatory and libertarian contributor — the relaxation of Prohibition to allow beer.  

In the build up to beer’s return, Edward Lansberg, President of Milwaukee’s Blatz Brewing Company, argued that, “The country is as rich in money and other material resources as it ever was, and restoration of individual liberty to the people will create a feeling of satisfaction and contentment which cannot fail to have a favorable reaction on business conditions throughout the country.” 

And he was right. A contemporary observer reported that beer’s return created “an almost amazing change in the spirit of the people. Stores are crowded [streets] are thronged and business obviously is improved … the optimism, the enthusiasm reflected everywhere, show a complete change of heart, a new hope.”  

If the sudsy recovery had been allowed to continue at anything resembling its April-to-July pace, the Depression would have certainly been over by 1934. Unfortunately, the National Industrial Recovery Act’s restrictive labor and cartel policies kicked in and the economy went back into a nosedive. Between August 1, when the Blue Eagle made its debut, and November, manufacturing output dropped 31 percent — one of the sharpest four-month declines in history. The recovery did not begin again in earnest until the summer of 1935 when the Supreme Court removed the NIRA’s economic shackles by ruling the program unconstitutional.  

Which takes us back to the fully justified critiques of the New Deal. FDR snatched six more years of depression from the jaws of economic recovery. As EC Harwood — who founded AIER in 1933 in direct response to New Deal overreach — observed “the Nation’s greatest economic problem [is its] increasing departure from economic freedom.” But we can be sure that even Harwood raised a glass of beer (3.2 percent alcohol by volume) to FDR’s relaxation of Prohibition in favor of personal liberty. 

These ideas are explored more fully in the newly released book The Brew Deal: How Beer Helped Battle the Great Depression.