Since 1920, the United
States government had been enforcing a prohibition on alcohol for reasons of
public morality. Many men who lost their jobs as a result of government
interference in the economy, or were unable to cope with the challenges of
living through the Great Depression, sought escape through intoxication. This
only further fed the bootlegging trade in alcoholic drink.
purchase a consignment of alcoholic drink in Mexico, Canada or the Caribbean
Islands and transport the product on their own boats to discrete American
coastal locations. The demand for alcoholic beverages across the USA during the
prohibition era attracted entrepreneurial types who were eager to meet the
demand of the market. Government officers were only able to intercept a small
amount of the import trade in alcoholic beverages.
The lesson of prohibition
is that as long as there is a sizeable market demand for a prohibited product,
entrepreneurs become more ingenious in how they produce the product and deliver
it to market. Prohibition reduces supply for a product that is in demand and
therefore raises its price. The prospect of high earnings and massive profits in
a restricted market provides incentive for entrepreneurs to perform at far
higher levels than entrepreneurs who provide goods and services to the open
The exchange between
entrepreneurs and their cash-only customers is mostly peaceful and mainly
private. Only unwise customers incur debts with their suppliers. Participation
in a restricted market requires very capable, very competent, very ingenious and
often ruthless entrepreneurs who are willing to live by the law of the jungle.
The spectacle of gangland gunfights that prevailed on the streets of Chicago and
New York City during the prohibition era was how rival entrepreneurs sought to
resolve their disputes.
An extreme version of
that spectacle now occurs just south of the US/Mexico border. The mayhem may
involve rival gangs or clashes between gangs and various government agencies.
The United States represents a major market for a wide variety of prohibited
products. As long as there is a large demand for such products, there will be
entrepreneurs willing to supply the demand. The prospect of high earnings
attracts some entrepreneurs while the thrill of going up against challenging
odds attracts others.