Erie Brewing advertised its DPO in the Warren Times Mirror on December 5, 1932.
Example of a brewery IPO“ tombstone” advertisement from the March 23, 1933 Louisville Courier-Journal. Such advertisements, detailing the history of the brewery and how the funds raised from the IPO would be used, were common across the spring and summer of 1933.
business shifted to the production and sale of 3.2 beer after it became legal to do so in Michigan on May 12, and the demand for its Pros’ t and Double Pros’ t beer far outstripped the small facility’ s ability to produce. Thus, on September 17, Pros’ t offered 240,000 shares of stock at $ 1 per share to expand the company’ s capacity.
Not all 1933 brewery funding came from public offerings, but there is conclusive evidence in the Financial Chronicle and other US newspapers that at least 127 of the 605 breweries that operated between April and December 1933 issued shares to the public. In total, these breweries offered over $ 66 million worth of common stock—$ 71 million counting the issuances of brewery-allied industrial firms such as bottle and barrel makers. This suggests that around one quarter of the estimated $ 250 million expended to fund beer’ s return in 1933 came through public equity financing.
Perhaps unsurprisingly, most breweries that issued shares in 1933 were located in the Northeast and upper Midwest, the regions that had both the most advanced securities markets and thirsty beer palettes. Breweries also appeared in the South and West, but most of those were smaller and found other ways to secure startup capital. Because the
Securities and Exchange Commission was not yet a factor, differences in state security regulations, the so-called“ Blue Sky Laws,” may have played a role in the geographical distribution of the brewery stock sales. Securities regulators proved particularly prudent in Illinois— an important state for brewers due to the financial markets of Chicago and the large beer-loving populations in several adjacent states— stopping one instance of overreach while allowing more stable issuers to proceed.
Although still a far cry from its August 1929 peak, the IPO market revivified in 1933 due to the brief but spectacular upturn in the economy and some frothiness in the market for new beer stocks, which accounted for 60 % of all new stock issues in dollar terms. Some market observers and state securities regulators feared that a boozy beer bubble could form, but official warnings— plus another downturn in the economy caused by FDR’ s Blue Eagle industrial codes and monetary policy uncertainty— cooled new issues by late 1933. The US economy and stock market failed to recover for the rest of the decade, but at least Americans no longer had to face the Depression, or rising geopolitical tensions, stone cold sober.
Jason E. Taylor is Jerry and Felicia Campbell Professor of Economics at Central Michigan University. His latest book is The Brew Deal: How Beer Helped Battle the Great Depression( Palgrave Macmillan, 2024). Robert E. Wright has been on the editorial board of Financial History since 2008. He is the( co) author of 25 books, many on various aspects of US financial history.
Sources
Taylor, Jason E., Eline Poelmans and Evan Hayne.“ The Entrepreneurial Response to Beer Relegalization in 1933 Prior to the End of Prohibition.” Business History 66, No. 7. 2024.
Taylor, Jason E. The Brew Deal: How Beer Helped Battle the Great Depression. Palgrave Macmillan. 2024.
Taylor, Jason E., Robert E. Wright and Abdul- Samed Adamu Bukari.“ Beers in Stock: Financing Legal Beer’ s Return at the Nadir of the Great Depression.” Business History, forthcoming.
Wright, Robert E. FDR’ s Long New Deal: A Public Choice Perspective. Palgrave Macmillan. 2024.
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