Financial Crime World

Financial Crime Case Studies in SAINT PIERRE AND MIQUELON: A Hidden Hub for Smuggling Liquor during Prohibition Era

In the early 20th century, France’s smallest colony, Saint Pierre and Miquelon, off the coast of Newfoundland, transformed into a lucrative hub for smuggling liquor into North America. The territory, with its strategic location just 15 miles from Canadian shores, became a prime destination for bootleggers and suppliers seeking to capitalize on the Prohibition era.

The Volstead Act, which took effect in January 1920, made it illegal to manufacture, transport, or sell intoxicating beverages in the United States. However, French law governed Saint Pierre and Miquelon, allowing the production, storage, and transportation of liquor without restrictions. This legal loophole attracted the attention of prominent figures such as Samuel Bronfman and Al Capone.

The Canadian Connection

Canadian whiskey distillers were among the first to take advantage of the situation, establishing a presence on the islands. The colony’s deep-water ports allowed for year-round docking, and the low import duties made it an attractive option for smugglers. According to historian Daniel Okrent:

  • Saint Pierre lay just 15 miles off Canadian shores but was considered foreign for duty purposes.
  • This made it an ideal location for importing liquor without paying customs duties.

The Economic Boom

The economic boom was almost immediate, with the French government investing close to 20 million francs in improving harbor and storage facilities. The colony’s income from customs alone tripled its operating budget before Prohibition. Gangsters and bootleggers flocked to Saint Pierre and Miquelon, including Al Capone, who allegedly had a private residence on the island.

  • Over two million gallons of Canadian whiskey were shipped to the territory in just one year.
  • The Canadian Bank of Imperial Commerce established a branch on the territory, recognizing the lucrative business opportunities.
  • Local residents benefited greatly from the economic prosperity, with many fishermen converting their refrigeration plants into liquor warehouses.

The Repeal and Decline

However, the Prohibition era came to an abrupt end with the repeal of the Eighteenth Amendment in 1933. Demand for bootlegged liquor disappeared almost overnight, plunging Saint Pierre and Miquelon into a massive depression that lasted for years. The colony has never experienced a boom as significant as it did during those 13 years.

A Legacy of Financial Crime

Despite a more diversified economy emerging from tourism and oil and gas exploration, the archipelago’s financial crime case studies remain an intriguing part of its history. As Canadian historian Peter C. Newman noted:

  • “Saint Pierre according to Canadian historian Peter C. Newman be ‘buried in an avalanche of freight, pungent with the smell of superior liquor … so strong that at times the fog that rolled up Saint Pierre’s steeply inclined streets with the nightly tides would carry a distinct Scotch flavor.’”