Professor K. Austin Kerr of The Ohio State University writes:
The sale of dissipation is . . . a great business . . . in Chicago. The leading branch . . . is the sale of alcoholic liquor .... [T]he liquor interests are vastly more extended in Chicago than any other. There are 7,300 licensed liquor sellers in Chicago, and . . . about a thousand places where liquor is sold illegally. The only business which approaches this in number of establishments... is the grocery trade, which has about 5,200. The city spends at least half as much for what it drinks as for what it eats. . . .
The great central power in the liquor business in America is the brewery. . . . [T]he breweries own or control the great majority of the saloons of American cities. They have a distinct policy:--If there are not as many saloons as there can be, supply them. This is what has been done in Chicago. Fully ninety percent of the Chicago saloons are under some obligation to the brewery; with at least eighty per cent, this obligation is a serious one.
The business of the brewery is to sell beer. . . . The brewery, under present conditions . . . must sell beer at all cost, or promptly die. This is because the brewing business has been over-capitalized and overbuilt there for at least ten years. There has been furious competition .... [A]t the present time a full third of the capital invested in the forty companies and fifty plants is not earning dividends. Under these circumstances, the breweries of Chicago can have but one aim--to fill Chicago with beer to the point of saturation.
Each brewer disposes of his product by contracting with special saloon-keepers to sell his beer and no other. The more saloons he has, the better. . . . The brewers employ special agents to watch continually every nook and cranny in Chicago where it may be possible to pour in a little more beer. If a rival brewery's saloon-keeper is doing well, his best bartender is ravished from him and set up in business alongside. If a new colony of foreigners appears, some compatriot is set at once to selling them liquor. Italians, Greeks, Lithuanians, Poles . . . have their trade exploited to the utmost . . . . [N]o man with two hundred dollars [capital] . . . need go without a saloon in Chicago .... [T]he brewery sorts him out a set from its stock of saloon fixtures, pays his rent, pays his license, and supplies him with beer. He pays for everything in an extra price on each barrel of beer . . . .
Under this system . . . Chicago has four times as many saloons as it should have, from any standpoint whatever, except, of course, the brewers' and the wholesalers' . . . . There is . . . one retail liquor dealer to every two hundred and eighty-five people, disregarding, of course, the one thousand unlicensed dealers. In the laboring wards the licensed saloons run as many as one to every one hundred and fifty. Take the stock-yards. Around that long and dismal stockade, at every hole from which a human being can emerge, a shop or group of shops sits waiting. At the main entrance they lie massed in batteries. . . .
The Chicago market is thoroughly saturated with beer, and incidentally with other liquor. Reckoning it out by population, every man, woman, and child in Chicago drank, in 1906, two and one-quarter barrels of beer, --that is, seventy gallons, -- three and one-half times the average consumption in the United States . . . .
Now, if the competition is red-handed among the breweries, it is simply ravenous among the saloon-keepers. There is a popular fallacy that there is great profit in the retail saloon business. The saloon-keepers themselves believe this when they go into it . . . .
All this means one thing -- a premium on the irregular and criminal saloon-keeper. . . . A place is popular, or it is nothing . . . . There are two general business methods of attracting it [a good trade]: By giving unusually large measures and big bonuses of free lunch; or by carrying illegitimate and illegal side lines. The first . . . does not leave large margins of profit; the second does. A year ago the license fee was raised [to] . . . wipe out the criminal saloon. It did, of course, nothing of the sort. The poor, miserable little dives in the working-man's ward, each snatching a starvation living from the lips of the dwellers of the dozen smokebefouled frame tenements about it, staggered down--a few hundred of them--and died. The man with the side-line of prostitution and gambling naturally survived and had the benefit of the others' failure.