It was May 1922, and August A. Busch Sr. needed a break. A long one. So he did what America’s wealthiest dynasts do, and treated the word “summer” like a verb. Leaving St. Louis behind, Busch embarked on a three-month retreat to his family’s estate in western Germany.
It’s certainly easy to smirk at the elitist image of Anheuser-Busch’s president leaving his titan brewery to travel first-class to his personal castle on a European hillside, but I urge you to resist the temptation. If you’d spent the last two years trying to keep one of the nation’s largest ex-breweries afloat during Prohibition—which banned the manufacture, importation, transportation, and sale of your primary product nationwide—you’d need a vacation too.
Reaching the coast, Busch boarded the SS George Washington, a passenger liner about half the size of the Titanic. However, as soon as the ship passed into international waters and out of United States jurisdiction, something peculiar happened. The staff threw open cabinets stocked with European beer, liquors, and wines, and opened not one but five bars throughout the ship. It was as if Prohibition never existed at all.
As you might imagine, this upset Busch more than a little. The George Washington, like many American passenger ships at the time, was actually owned and operated by the United States Shipping Board, a government agency. In other words, the government tasked with enforcing Prohibition on Americans was slinging drinks on the side.
Busch wasn’t about to take this lying down. The once and future king of American brewing soon squared off against Albert Lasker, an advertising guru turned reluctant chairman of the Shipping Board. Their very public feud over the right to sell alcohol delighted a media eager for gossip to broker, put a finger on the scales of the 1922 congressional midterm elections, and spurred a Supreme Court case. More than any of that, the scandal laid bare the strange politics of the Prohibition era.
The process of recasting ideals as policy is sometimes necessary but always messy. Enforcing sobriety required expanding the reach of government and contorted it into more than one untenable position. For everyone else, either wielding or resisting the power of Prohibition meant taking counterintuitive or even contradictory action.
This was especially true in the early 1920s. In retrospect, we often regard Prohibition as a political tide on its way either in or out—as a looming threat to the alcohol trades, or as a waning farce made irrelevant by scofflaws and speakeasies. But for this story, consider Prohibition as something elemental, a force of nature whose irrevocable presence stretched over the horizon. We cannot steer the storms over our heads. We prepare as we can, wait them out, and do what must be done while they rage.
Prohibition began in 1920. We know now that it would only last about 13 years and be repealed in 1933—but no one knew that at the start. The way forward was still a dense, sober fog, which made the choice to continue running a brewery an act of both faith and hope. As Mike Thompson, an archivist based at Anheuser-Busch’s St. Louis brewery, puts it, “It was about survival.”
August Busch Sr. had fought the steady creep of prohibitionist forces during his entire tenure as Anheuser-Busch’s president, and even prepared for the prospect of a dry nation. But for all that effort, Anheuser-Busch was in no position to weather the storm when the 18th Amendment finally took effect in 1920.
Between 1919 and 1921, the company posted losses of some $5.3 million—more than $86 million today. On top of that, it borrowed another $6.5 million in new debt, sinking it more than twice as deep in the red. In October 1921, company leadership was forced to lay off some workers and reduce the wages of others, including their own. August Busch waived his $40,000 salary—over $600,000 today—entirely, starting in January 1922.
“The belief expressed by the company’s leadership … [and] August Busch Sr., was that if Prohibition was put into effect and it was fully enforced … the American people would reject it sooner or later.”
The primary reason reported losses weren’t much higher is because Busch set up a committee tasked with combing the books for excess properties, equipment, and other assets the company could sell off. By 1924, it had shed almost half its total assets at garage-sale prices.
With the beer taps cut off, Anheuser-Busch needed new products to make. Thompson recounts the company’s early scramble as “throwing spaghetti at the wall to see what would stick.”
Ginger ale, chocolate and grape sodas, tea-flavored beverages, even a near beer version of Budweiser—the company bottled every sort of non-alcoholic beverage it could (except, ironically, lemonade). The centerpiece of this rickety stable was Bevo, a barley-based malt beverage released in 1916, developed for the growing number of dry states and “zones” that had banned alcohol in advance of national Prohibition.
Other strands of spaghetti included repurposing refrigeration equipment to make ice cream, malt into malt syrup, and brewing yeast into baking yeast. Anheuser-Busch also branched out by manufacturing and selling refrigerator trucks, parts for early recreational vehicles, and even a few armored cars for the St. Louis Federal Reserve. Besides the trucks, these were mostly typical products attempted by brewers hoping to survive Prohibition. In many cases, the products failed and breweries closed. Anheuser-Busch’s versions didn’t exactly do better in the market, but the company’s deep pockets allowed it to hold out longer while it searched for solutions.
None of these new products turned a meaningful profit. Bevo stood the best chance, and indeed was probably the best-selling near beer of the Prohibition years. But it had been kneecapped before Prohibition even began. According to Thompson, Bevo initially sold quite well. However, when the U.S. entered World War I the following year, prohibitionists convinced the federal government to severely restrict (and eventually ban) the use of barley for brewing. Despite its lack of alcohol, Bevo suffered collateral damage.
“Because we [Anheuser-Busch] do not have the amount of barley we normally use … the flavor profile likely changed,” Thompson explains, “... so you start to see sales for Bevo even tail off before the Prohibition era begins.”
“Neither in point of volume, nor in margin of profit, could the new products at first come up to the old [beer business],” August Busch later lamented, “and borrowing was essential.” Keeping the lights on meant an indefinite stall of loans, diminished wages, and trimming fat to the bone.
Eventually, some spaghetti would stick. By 1932 the company was turning just enough profit to float on, thanks in large part to baker’s yeast sales. But that was a decade away, on the far side of Prohibition’s dense fog. As of 1922, prospects looked pretty bleak. Why continue at all under these circumstances?
Because if you’re going through hell, keep going. “The belief expressed by the company’s leadership … [and] August Busch Sr.,” Thompson explains, “was that if Prohibition was put into effect and it was fully enforced … the American people would reject it sooner or later.”
Busch needed to do everything he could to keep sooner from becoming later.
Eight hundred miles away, in Washington, D.C., Albert Lasker had his own problems. Lasker was the newly appointed chairman of the United States Shipping Board, an agency set up during World War I to bolster the naval auxiliary and merchant marine—in other words, to keep American sea commerce for both passengers and cargo afloat. For newly elected President Warren Harding, the USSB was a big deal. During his campaign, Harding had promised to both make the U.S. a “most eminent of maritime nations” and to eliminate government waste. The USSB was an abysmal failure on both fronts.
Lasker was no salty sea dog. Chairmanship of the Shipping Board, despite the agency’s problems, was an influential and enviable position, but by his own admission Lasker knew nothing about the shipping business. He was an ad man from Chicago who owned the famed advertising firm Lord & Thomas. Lasker helped invent modern orange juice because he needed a new way to market oranges, and told women they could stay slender by smoking Lucky Strike cigarettes. Anheuser-Busch was even a client at one point. Harding hired him to sell the Republican ticket in the 1920 election, and the Shipping Board was his reward. According to “The Man Who Sold America: The Amazing (but True!) Story of Albert D. Lasker and the Creation of the Advertising Century,” by Jeffrey Cruikshank and Arthur Schultz, Lasker never wanted the job to begin with, and took it on two primary conditions: that he would stay no more than two years, and that unless the President was prepared to fire him, Harding’s administration would stay out of his way.
True to character, Lasker resolved to sell his way out of the Shipping Board’s problems—he’d trim dead weight from the account books, convince Congress to invest in the American merchant marine, and conjure up demand for American passenger liners.
It would be impossible to understate how big a task this was. The USSB was in such disarray that it was losing an average of $15 million every month—over $219 million today. Nearly a quarter of its fleet was still made of wood. The federal government had repurposed any ship it used during World War I, and many needed costly refits before they could re-enter civilian service. Upon assuming his post, Lasker told a reporter that the USSB was the “most colossal commercial wreck the world ever knew.” But Lasker’s biggest problem was liquor.
The United States wasn’t the only competitor on the high seas. According to Lawrence Spinelli’s book, “Dry Diplomacy: The United States, Great Britain, and Prohibition,” European nations—particularly Britain—also rushed to expand their passenger fleets in the wake of war. Working-class immigration across the Atlantic was waning, and affluent tourist travel was on the rise, which goaded ocean liners into a race to offer the most luxurious amenities for their voyages. Everyone in the industry agreed: a good wine and liquor spread was essential for passenger ships to turn a profit.
By the time Lasker took over, the Shipping Board had already appealed unsuccessfully to U.S. Attorney General Harry Daugherty for permission to sell liquor in international waters. If U.S. jurisdiction ended three miles from the coast (today the boundary is 12 miles), they argued, surely Prohibition should too. The Justice Department disagreed, ruling that American laws applied to American ships wherever they sailed. Congress, dominated by prohibitionists, refused any legislative recourse. Foreign ships, meanwhile, operated without alcohol restrictions.
This was very bad for business, and for Lasker. American travelers, it turned out, were not so patriotic as to choose a dry American ship when they could drink freely aboard a British ship instead. Without passengers, he couldn’t make the USSB profitable, nor convince Congress to subsidize empty American ocean liners.
To have any chance of success, Lasker needed all ships—foreign and domestic—to either allow alcohol or ban it. He needed a level playing field. Incidentally, that’s what August Busch needed, too.
The moment alcohol was banned in the United States, bootlegging became a growth industry. Booze was smuggled across the border from the Florida Keys to the Washington State coastline, and everywhere in between.
The government was overwhelmed. In 1920, there were only about 1,500 federal Prohibition Bureau agents in the whole country, and at least three times as many speakeasies just in New York City. Dozens of states spent little or nothing on Prohibition enforcement, leaving the task entirely to the feds. Courts became overloaded with cases and, according to historian William Rorabaugh, weren’t always interested in throwing bootleggers into jail on the taxpayer dime. Instead they levied fines, a handy way to offset the government’s lost revenue from alcohol taxes. They even scheduled bargain days, where hundreds of violators could show up en masse, plead guilty to some meager charge, pay their fine on the spot, and walk right out again. On the other end of the spectrum, bootleggers regularly bribed law enforcement to look the other way.
According to Rorabaugh, alcohol consumption shifted in favor of hard liquors during Prohibition—but individuals still homebrewed, some beer was still smuggled across the border, and big cities still had significant demand for bootleg beer. During the 1920s, hundreds of commercial breweries legally produced near beer at about 0.5% alcohol by volume, typically by brewing full-strength beer and removing the alcohol later. Predictably, many profit-starved breweries diverted some of the good stuff to bootleggers before dealcoholizing the rest. The problem was so pervasive that in 1922, about 40% of the nation’s 500 operating breweries were cited for Prohibition violations.
Naturally, we have to ask: Was Anheuser-Busch one of these errant breweries? It’s theoretically possible, but improbable. Like others, it brewed full-strength beer that was later dealcoholized, but it doesn’t seem to have carted any out the back door. Even in “Under the Influence: The Unauthorized Story of the Anheuser-Busch Dynasty,” the scandalous history of Anheuser-Busch published in 1991, August Busch Sr. is described as quite strict about adhering to the law. Busch’s son August Jr, or Gussie, is quoted in the book as saying “Daddy wouldn’t let us take one bottle out of the place.”
Indeed, August and the company may well have been Prohibition’s most backhanded supporters in the early 1920s. Using the company’s resources, August commissioned a stream of statements and testimonials throughout 1921, decrying pervasive illegal alcohol consumption, the rivers of bootleg liquor traversing the nation, and the impotence of law enforcement. Over and over, they insisted that illegal alcohol made it impossible for legal products like Bevo to compete. When Congress considered a proposal to allow doctors and pharmacists to prescribe beer as medicine late that year, Anheuser-Busch sent a representative named Oliver Remmers to the Capitol to testify against it. Remmers sat beside prohibitionists, including Anti-Saloon League head Wayne Wheeler himself, to testify that medicinal beer would dangerously undermine enforcement efforts and create a loophole through which illegal beer would pour into the nation.
Anheuser-Busch’s pre-Prohibition record of ascribing significant health benefits to its beer, and even touting physician endorsements for the same, was ancient history now. The company upheld strict enforcement over defiance as the remedy to Prohibition, no matter how strange its political bedfellows—or adversaries—became.
As Thompson recounts, Remmers also delivered a telegram from August Busch at the congressional hearing. “The takeaway from that is that August Busch’s motto was, ‘Beer for all or beer for none,’” he says, “and that was sort of his philosophy when it came to the Prohibition laws.”
Albert Lasker didn’t share that philosophy. While Busch looked to enforcement for salvation, Lasker skirted it entirely. Without consulting the other board members, Lasker defied the Justice Department’s ruling and authorized the sale of liquor on USSB ships in July 1921. Then came the tricky part: Lasker needed travelers to know liquor was available so they’d buy tickets, but he also needed to keep the government and media from asking questions. So the ad man went to work.
Lasker’s office began running ads announcing that American passenger lines carried “the choicest wines and liquors,” but only in European newspapers. When asked, Lasker’s staff assured U.S. government officials that the Shipping Board strongly opposed the sale of liquor on American ships. They simply ignored the growing pile of passenger letters complaining about liquor on USSB vessels, as well as press inquiries on the subject.
This was a dangerous game. While he quietly sold liquor on American ships, Lasker began helping President Harding sell Congress on new legislation to subsidize shipping. The bill already faced significant opposition, and a boozy scandal might sink it completely.
It’s testament to Lasker’s salesmanship that he managed to keep up this duplicitous balancing act for almost a year. It wasn’t until May 1922 that whispers of shipboard alcohol service received real newspaper coverage. Soon Wayne Wheeler was demanding an explanation. Before Lasker could respond, August Busch boarded the George Washington.
Busch wasn’t some shrill blueblood Lasker’s office could bamboozle. He was a battle-hardened industrialist coming off the worst two years of his professional life. When Busch arrived in Europe on June 8, 1922, he deployed the full might of his company to send a message Lasker couldn’t bury.
“I learn that passage on these ships has been sold with a positive moneyback guarantee,” Busch wrote, “that the bars for the sale of intoxicating liquors will be thrown wide open as soon as they pass the three mile coast line … This makes the United States incomparably the biggest bootlegger in the world.”
His letter went on, placing the USSB like a cherry atop the grand anti-Prohibition narrative that Anheuser-Busch had been building for two years: The government made a farce of law itself by failing to enforce its ban on alcohol. It forced law-abiding businesses to suffer while lawbreakers profited from its ineptitude. And now, the government itself had joined them! If Prohibition couldn’t actually be implemented, Busch charged, then it shouldn’t exist. Beer for all or beer for none.
At August’s direction, Anheuser-Busch sent copies of the letter not just to Lasker, but to President Harding, each member of Congress, and every major newspaper in the country. Included with the letter were copies of the European advertisements that the USSB had commissioned, as well as the George Washington’s wine list.
“I learn that passage on these ships has been sold with a positive moneyback guarantee, that the bars for the sale of intoxicating liquors will be thrown wide open as soon as they pass the three mile coast line … This makes the United States incomparably the biggest bootlegger in the world.”
The timing could not have been worse. If Lasker had been called out for selling alcohol on American ships when he first started in 1921, it would have just been about him and the USSB. But now the Harding administration had spent a lot of time and political capital on advancing Lasker’s ship subsidy bill through Congress. They were out on a limb, and 1922 was a midterm election year to boot. Now every debate of the bill centered on the alcohol issue, and there were a lot of prohibitionist legislators on Capitol Hill.
Lasker’s only choice was to get loud. He confirmed the allegations but said that the Shipping Board had approved the move. He claimed the alcohol sales were not only legal but necessary for the “life and security of our national merchant marine.” Further, Lasker insisted that he’d run the whole thing by President Harding in advance, and received his approval. These were all lies. To further obfuscate the narrative, Lasker included a number of personal attacks against Busch, emphasizing the brewer’s obvious self-interest as well as his German heritage—a callback to the nation’s anti-German paranoia during World War I. The advertising guru declared of Busch, “You do not come before the bar of public opinion with clean hands.”
The bluster, however, mostly backfired. President Harding hung Lasker out to dry, stating publicly that he was “unacquainted with the subject.” Attorney General Daugherty held a private meeting with him, and two days later issued a public statement forbidding American ships from carrying alcoholic beverages. And in response to Lasker’s accusations of foreign influence, Anheuser-Busch insisted that it “reserves the right to protest when the United States government buys foreign beer to sell on its ships and will not let American beer be made.”
Newspapers generally sided with Busch. The New York Globe said of the USSB’s alcohol sales, “The shipping board’s profits … go into the national treasury. May it not be said that the proceeds of the George Washington’s well stocked bar help to maintain the flock of Prohibition agents who prevent Mr. Busch from manufacturing and selling their comparatively innocuous beer? If Mr. Busch did not writhe under this irony he would be more than human. Mr. Lasker’s personal references to Mr. Busch are in wretched taste.” Similar editorials appeared all over the country while letters flooded into the White House, calling for Lasker’s dismissal and even prosecution as a common bootlegger.
But Lasker doubled down. Despite the Justice Department decision, there was no specific law against American ships selling liquor in international waters, and President Harding hadn’t explicitly directed him to stop. So the USSB kept selling while Lasker insisted that he was upholding the “freedom of the seas.” But that didn’t resonate, either. One newspaper called the whole situation “the biggest joke to which the Eighteenth Amendment has yet been subjected,” while another said, “Mr. Lasker’s idea of the freedom of the seas via the alcoholic route seems to be a gold brick, so poorly plated that you can see the brass even before you buy it.”
August Busch and his company continued their campaign against Prohibition, and wove shots at Lasker and American shipping into their broader messaging. Company literature, like its sales promotion magazine The Tatler, took every shot it could at Lasker and the government alongside puff pieces about Bevo, yeast, and ice cream. Their only hope was that the momentum Busch created would help generate enough enforcement—and the backlash—to end Prohibition.
As Spinelli’s research shows, Lasker’s scandal affected far more than his reputation at the board. The Harding administration was completely blindsided by the issue, and their precious ship subsidy bill became ensnared. If he supported the sales, prohibitionists in Congress would kill the bill. If Harding came out against liquor sales on ships, he would probably bankrupt the shipping industry anyway. Ultimately he chose to do nothing and let Lasker continue to draw criticism for him, but even that made his administration look feckless and weak.
The controversy also precipitated a minor diplomatic crisis. Prohibitionists like Wayne Wheeler didn’t like publicly agreeing with August Busch, but they were loath to admit that the American people wanted to drink. So they avoided public comment on the issue and instead worked behind the scenes to enact a total alcohol ban for any ship in U.S. waters, not just American ones.
Lasker didn’t mind at all. If he couldn’t sell alcohol on his own ships, then preventing his competitors from doing so was the next best thing. But this boon for Lasker was a disaster for the rest of the administration. After months of pressure, the Justice Department finally caved on October 6, 1922. They repeated their position that American ships couldn’t sell or carry alcohol, forcing a waffling Harding to finally act. Within two days, the American fleet was bone-dry.
“The shipping board’s profits … go into the national treasury. May it not be said that the proceeds of the George Washington’s well stocked bar help to maintain the flock of Prohibition agents who prevent Mr. Busch from manufacturing and selling their comparatively innocuous beer? If Mr. Busch did not writhe under this irony he would be more than human. Mr. Lasker’s personal references to Mr. Busch are in wretched taste.”
Nor did Lasker’s respite last. Foreign shipping companies naturally objected to the Justice Department’s ruling, and Attorney General Daugherty promptly caved. The Department announced that foreign ships could carry alcohol after all, so long as it was kept sealed while in U.S. territory.
This time the Drys pushed back, and it wound up in court. On October 27, two weeks before the 1922 midterm elections, a court ruled that foreign ships could indeed carry sealed liquor. Harding and his administration looked weaker than ever.
It was a disaster for everyone. Passengers continued to abandon American ships in droves, and the Republican Party under Harding lost a whopping 77 seats in the House of Representatives. Harding’s ship subsidy bill became a political hot potato that got delayed into oblivion. There was no question that Prohibition concerns were to blame for all of it.
The saga wasn’t over just yet. Repeated confusion had led to dozens of lawsuits by foreign and private American shippers, and some made their way to the Supreme Court. On April 30, 1923, the court decided an aggregated case called Cunard v. Mellon, ruling that Prohibition did not automatically apply to American ships once they left U.S. territorial waters. Inside that three-mile limit, however, the U.S. could ban alcohol on any ship, from any nation. British officials called it “puritanism run mad,” but the ruling was definitive. Effective June 10, basically all liquor was barred from American waters, even under seal. British ships sailing west across the Atlantic were forced to throw any leftover stores overboard before they reached the U.S. coast.
Lasker applauded the Supreme Court decision, since it could allow USSB ships to sell liquor on basically the same terms as foreign ships. But for now, the Shipping Board fleet remained dry. President Harding’s previous order requiring all government passenger ships to ban liquor was still in effect, and Lasker promised that alcohol sales would only resume if he rescinded it.
But Harding never lifted the ban. After two fraught years in public service, Lasker arranged his retirement from the USSB for July 1923. Before he left, there was something of a celebration to be had: After years of costly refits, the USSB was ready to recommission a gigantic passenger liner, called Leviathan, for service.
Lasker organized a revelous comeback voyage aboard the Leviathan for himself and a few hundred Washington bigwigs. Newspapers blasted the move as political excess and a waste of taxpayer money, but Lasker didn’t seem to care. He was on his way out of politics, after all.
Shortly before the trip, Lasker noticed a little detail in the planning. Since alcohol was still banned, the Leviathan would serve near beer during the voyage, and Anheuser-Busch had been contracted to supply it.
The contract was inexplicably canceled soon after. Anheuser-Busch called it retaliation, while Lasker reportedly said, “Time at last sets all things even.”
An irony of this scandal was that both Lasker and Busch got what they wanted, just not enough to solve their problems. Busch got stricter enforcement at sea, but it failed to spare him another 10 years of Prohibition. Lasker forged a level playing field between American and foreign shipping on the alcohol issue, but Harding never risked the political capital to let him play on it. Prohibition’s storm thundered on overhead.
Another irony is that, besides Wayne Wheeler, none of the Busch-Lasker controversy’s principal characters actually supported Prohibition. Warren Harding famously held whiskey-soaked poker games at the White House, and Attorney General Daugherty was known to attend. Albert Lasker only cared about keeping the Shipping Board profitable, and we all know where August Busch stood.
This story, then, helps us see the strange ways that Prohibition twisted political bonds. As historian Lisa McGirr points out in her book, “The War on Alcohol: Prohibition and the Rise of the American State,” Prohibition pushed the nation’s longstanding moralizing impulse into peculiar conflict with its commitment to expansive capitalism. Such conflicts were hardly new, even in the context of alcohol, but Prohibition’s sweeping national mandate drew new boundaries in unexpected places. Many who grappled with Prohibition found themselves making arguments they never expected to make, alongside allies of convenience they never expected to be convenient.
That same relitigation of the United States’ feud between morality and money meant that Prohibition ultimately bolstered the power of the American state, deepened Americans’ commitment to so-called law and order, and upheld the racial and economic status quo. The more things changed, the more they stayed the same.
I prefer to think of it this way. If not for Prohibition, August Busch and Albert Lasker might well have bonded in elite social clubs in Chicago or St. Louis, enjoying cigars and brandy—or Budweiser—while measuring each other’s pocket books. With Prohibition, they probably would have just exchanged dirty looks across the room. But they were both still in the club.
Words by Brian AlbertsIllustrations by Colette Holston
