Brewing Dynasties and Broken Ladders: State Prohibition and the Destruction of the German-American Economic Elite, 1870--1920

Abstract

Between 1881 and 1919, thirty-three U.S.\ states adopted prohibition, destroying the German-dominated brewing industry. Using a state-year panel of 47 states across six census years (1870–1920) constructed from published Census tabulations, I estimate prohibition's effect on the German-born population share. Average two-way fixed-effects estimates are positive, reflecting selection: prohibition states had small German populations. However, interacting treatment with pre-prohibition brewing intensity and German enclave status reveals that prohibition reduced German-born shares precisely where Germans were concentrated. In states with above-median German populations, the net effect of prohibition was a 2.1 percentage point reduction in the German-born share ($p < 0.01$). In high-brewing-intensity states, the net effect is similarly negative. These heterogeneous effects are consistent with the destruction of an ethnic enclave economy driving German out-migration.