When the US government made booze for the masses

Most people know FDR signed the repeal of Prohibition into law. Few know his New Deal programs included government-manufactured booze.

Specifically, the Virgin Islands Company and its Government House Rum product, a financial attempt by the Department of the Interior to bring much needed economic stimulus into the island territory during the Great Depression. Not only did FDR approve the federally-owned liquor distillery, he helped design the label for the delicious rum product, as reported by LIFE Magazine:

US govt booze during the Great Depression with a label designed — at least in part — by President Roosevelt

The Virgin Islands Company (VICO) was urged to take advantage of the primary cash crop in the area — sugar cane. During the Great Depression, the federal government sought to inject funds into local industries all across the US in an effort to stem catastrophic unemployment. In the Virgin Islands, rum was a main industry. If the US government needed to get into the business of booze to keep people working, so be it.

A US court document about the Virgin Islands Company and its Government House Rum imprint, from 1952, states:

All the net proceeds of the Virgin Island Company’s (VICO) operations were used for the benefit of the inhabitants of the Virgin Islands. All of VICO’s funds were deposited currently in the Treasury of the United States as a special fund, and at the end of each fiscal year the net profits, less reserves, were transferred to the general fund of the Treasury. […] On October 8, 1936, “in order to develop a substantial demand for VICO rum (i.e., the rum produced at this distillery) in the United States and thereby to increase its volume of sales,” VICO contracted [with distributors across the] United States, District of Columbia and Alaska. […] When the 1936 agreement was effected, the parties had not decided on a name and label for the product in the United States market. In December, 1936, the Governor of the Virgin Islands suggested the name “Government House.” President Roosevelt upon request sketched the label. Defendant asked the Secretary of the Interior to grant permission to use the “Government House” name, urging that “`the most valuable asset’ of VICO rum was that it `has been made and controlled from start to finish by a corporation set up by the United States Government,’ and that `the consuming public as well as the distributing trade’ could be informed by the label and by advertisement that `the rum has back of it a United States Government controlled corporation.’” The name and label were subsequently approved by the Secretary of the Interior and the President of the United States. The Federal Alcohol Administration granted its approval upon being advised “that the rum in fact was being produced and would continue to be produced under the auspices of VICO, a government corporation.” VICO first affixed the “Government House” label to its rum on March 16, 1937.

This was all, of course, not without controversy — even for the late 1930s. Today, in our more “libertarian” times, it’s doubtful the US public would accept the government controlling the manufacture of liquor in any capacity — even if Cuba’s own government-owned Havana Club rum is a highly sought after commodity among drink aficionados. During the Great Depression many were happy to see the government help keep folks employed however it could, even if it meant owning a liquor-producing business that was vital to the local economy.

Still, cartoonists had a field day with the idea of the US government producing rum. Interior Secretary Harold Ickes came under fire particularly. “Be a good neighbor — DRINK the Virgin Islands back to prosperity!” one cartoon howled (see below).

Some cartoons made fun of the New Deal rum project

Despite the satire, the rum did very well in the US. Apparently, the stuff was good. Americans were not wont to let any notions of small government conservatism get in their way of having a good drink. According to the Virgin Islands Daily News in 1937:

Who knew Americans were alcoholic Communists?

Government House Rum was apparently pretty delicious and enjoyed popularity into the 1950s, when it was apparently sold to private interests. Newspaper ads containing Government House Rum recipes could be found in many papers.

According to Brent at the excellent New Deal of the Day blog:

The Virgin Islands company was created by the U.S. federal government with $1 million in start-up funds from the Public Works Administration (PWA). The goal of the company was to rehabilitate the island’s sugar and rum industries. President Franklin Roosevelt summed up the situation in the Virgin Islands, before and after the creation of the Virgin Islands Company:
“In the years preceding 1933, there had been a gradual and serious decline in the economic well-being of the Virgin Islands…unemployment was so widespread that over 60 percent of the population was found to be eligible for relief…The major industry in the Virgin Islands has always been the sugar business…in 1930, the West India Sugar Factory, Inc., which controlled 75 percent of the sugar business in St. Croix, discontinued operations. Efforts to organize a successor company were unsuccessful. All of the people who had worked in the industry, and in the cultivation of sugar cane for it, were thrown out of employment…The Virgin Islands Company now manufactures raw sugar and a substantial amount of rum, and has been engaged in restoring wastelands to sugar cane cultivation. During the development of the physical equipment of the company, employment was given to approximately 1,500 people, a very large percentage of the unemployed on the island of St. Croix. In fact, during this period of development there was practically no unemployment whatsoever in that island…it is anticipated that a thousand persons will be constantly employed by that company.”