Saint Pierre and Miquelon’s Hidden History of Financial Crimes

Saint Pierre and Miquelon, a tiny archipelago off the coast of Newfoundland, may seem an unlikely hub for financial crimes. However, during the 1920s and early 1930s, it became a hotbed of illegal activities.

A Lucrative Smuggling Operation

When the United States enforced prohibition in 1920, Saint Pierre and Miquelon, a French territory, found itself at the center of a lucrative smuggling operation. The island’s unique geographical location made it an attractive spot for bootleggers and suppliers.

Advantages of Location

Situated just off Canadian shores and close to the largest Rum Row supplying the American northeast, Saint Pierre and Miquelon had a distinct advantage. Under French law, it was legal to produce, store, and transport liquor on the islands, making it a paradise for gangsters.

A Hub for Liquor Smuggling

Canadian whiskey distillers quickly set up shop on the island, taking advantage of its deep-water ports and favorable import duties. Charging just four cents per bottle in taxes, compared to the Bahamas’ tenth-of-a-cent duty, Saint Pierre and Miquelon became an attractive destination for liquor kingpins.

International Landing Certificates

Historian Daniel Okrent notes that Ottawa’s strict regulations made it easy for Canadian distillers to acquire international landing certificates, exempting them from paying duty on exported liquor. “Saint Pierre lay just fifteen miles off Canadian shores, but for duty purposes it was as foreign as the Congo,” he writes.

A Prosperous Hub

The island’s prosperity soared as a prime hub for liquor smuggling into North America. The French government invested in harbor and storage facilities, which accommodated over a thousand ships annually. Income from customs alone tripled the operating budget of Saint Pierre and Miquelon before prohibition.

Gangsters and Bankers

Gangsters like Al Capone were drawn to the islands, with rumors of private residences on the island. Canadian bankers established a branch on the territory, considering it more profitable than doing business with Argentina, Australia, Ireland, or China.

Rum Runners and Bootleggers

However, getting liquor from Saint Pierre to American shores was the dangerous job left to rum runners, who risked arrest and seizures if caught by American customs officers. Famous bootleggers like Bill McCoy battled high-speed pursuit boats and potential hijackers on their ships.

Impact on Locals

For locals, the rising economic tide lifted all boats. Despite a massive construction boom, storage facilities remained inadequate, causing liquor companies to pay private homeowners for use of their basements to stockpile millions of bottles of whiskey or champagne.

The Repeal of Prohibition

However, what goes up must come down. When the Eighteenth Amendment was repealed in 1933, the demand for liquor dried up overnight, plunging Saint Pierre and Miquelon into a massive depression that lasted for years.

A Lasting Impact

Despite its current diversified economy, the archipelago has never experienced a boom like it did during those thirteen years. As Canadian historian Peter C. Newman notes, “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 flavour.’”