A “tied house” was a type of saloon that originated in England, but gained infamy in pre-prohibition America. An institution that was believed to promote intemperance, tied houses were one of many factors leading to national prohibition in 1919. A number of former tied houses remain in Chicago, long after the practice has been made illegal. Most of the remaining buildings were tied to the Milwaukee-based Schlitz brewery.
Ironically, the event which led to tied houses arising in Chicago came from an attempt at reforming liquor sales. In 1884, license fees to operate a saloon in the city were steeply raised in order to squeeze out lower class dives. Instead of going out of buisness, many saloon owners who could not afford the fee turned to breweries for financial assistance. The brewery would supply all the necessary accouterments to run a saloon. In exchange, the saloon keeper would be compelled to sell only that supporting brewery’s beer.
Brewing companies soon realized that tied houses were a very profitable way to dump their product on the population. During the 1890′s, the number of saloons in Chicago increased dramatically. This led to increased competition and price wars among breweries. However, the cutthroat competition among the breweries had an averse affect on its customers, and served to tarnish the respectability the industry had achieved during the 1870′s. To quote the Associated Beer Distributors of Illinois; “pressure was exerted on retailers to maximize sales without regard to the well being of customers or the general public.”
The negative effects of alcohol over consumption created a backlash. The tied house concept was not entirely to blame, but it was a definite factor contributing to national prohibition. After prohibition ended, the federal government gave states the authority to control beer and liquor sales. Most states instituted a “three-tier system.” Alcohol could only be sold from manufacturers to distributors, distributors to retailers. Each tier is not allowed to have an interest in the other two tiers. Thus, fair competition and moderate marketing practices were encouraged. There are some exceptions and variances to these laws, but the addition of a middleman and separation of interests in general has worked very well for the brewing and liquor industries.
