Courtesy of Art Distelrath

By Jason E. Taylor and Robert E. Wright

Within a year of legal beer’ s April 1933 return, American breweries multiplied fivefold, from 133 to 661. Most bubbled back to life after sitting idle during the 13-year-long ban on the production or sale of beverages containing more than 0.5 % alcohol as specified in the Volstead Act, the legislation enforcing the 18th Amendment. These brewing facilities needed new equipment, delivery trucks, barrels, bottles and cases, as well as raw ingredients such as barely, malt and hops. According to the United States Brewers’ Association, American breweries spent $ 250 million— around $ 6 billion in today’ s dollars— to facilitate beer’ s return. Financing this rapid brewery resurgence at the lowest point of the Great Depression showed the remarkable resilience of America’ s capital markets. So how did it happen?

During the bullish first six months of 1929, US corporations issued $ 3.4 billion($ 64 billion in today’ s dollars) worth of common and preferred stock. The Great Crash and subsequent bear market( the

Stock certificate showing the DPO purchase of 100 shares of Erie Brewing Company stock to Francis M. Keeley on January 12, 1933.

Dow dropped from about 350 to 50), however, reduced new issues almost to the vanishing point.“ Stock issues now occupy a minor place in our compilations,” the Financial Chronicle noted in July 1932,“ what little financing was done having been almost entirely in the shape of bonds and notes in sharp contrast with the [ pre-crash ] years when stock issues almost completely dominated the field.” But events in Chicago soon changed this. There, the Democratic Party held its 1932 National Convention where it nominated Franklin Delano Roosevelt for President and announced its intention to end Prohibition, first by relaxing the definition of an intoxicating liquor in the Volstead Act, and then by repealing the 18th Amendment. The American brewing industry, which had strongly objected to beer’ s classification as an intoxicant equivalent to liquors like whiskey and rum, got giddy. Legal beer’ s return would certainly prove a boon to those breweries that were ready to go from day one, so some began to prepare even before the November 1932 election. With the banking industry teetering and the bonds of small industrial corporations in the dumps, brewers turned to the public equity markets.

Norman S. Goldberger, the head of New York City’ s Fidelio Brewery, for example, moved fast and hard to secure equity financing. While almost all the nation’ s 1,400 pre-Prohibition breweries had gone under, Fidelio stayed in business, albeit at less than 15 % of capacity, by making dealcoholized“ near beer” and malt tonic. In the midst of the Chicago convention, Goldberger quickly organized Fidelio Brewery Inc. with a $ 1 million capitalization consisting of one million shares of common stock with a $ 1 par value.

To raise the funds necessary to bring the brewery back up to capacity for beer’ s return, Goldberger announced that 500,000 of these shares would be offered for public subscription at $ 2 each. On July 5, the New York brokerage house Bauer, Pogue & Co. began offering Fidelio shares in what was reported as the first brewery financing event since passage of the Volstead Act and only the second new stock issuance by any US corporation in 1932. A month later, Jetter Brewing Company of Omaha, Nebraska, became the second brewery to issue new stock when the brokerage group Harris, Ayers & Company offered 300,000 Jetter shares at $ 2 each. The proceeds of the brewery’ s IPO were likewise earmarked for upgrades in anticipation of legal beer’ s hoped-for return.

November’ s landslide election in favor of the“ Wet” Democrats strongly signaled that beer’ s return was both likely and imminent,

16 FINANCIAL HISTORY | Summer 2025 | www. MoAF. org