How a broke South Dakota town drank its way out of debt in 1914, did it again in 1935, and never stopped.
In 1935, just two years after Prohibition ended, the people of Sturgis voted for the city to go into the liquor business. There was only one problem: the South Dakota attorney general said the law allowing them to do so was void.
Sturgis voters apparently weren’t too concerned. They voted for it anyway. The question went before the South Dakota Supreme Court; the court sided with the cities, and Sturgis opened its own liquor store. Even more interesting, the man chosen to run it had done this before.
Because 1935 wasn’t actually the first time Sturgis had gone into the booze business.
What began as an unusual experiment in municipal finance became something remarkably permanent. Ninety years later, Sturgis is still selling liquor. Along the way, the story would include an acquitted manager, a stolen till, a missing $12,000, and a manhunt that ended in suicide.
But to understand why Sturgis decided the city government should sell whiskey in the first place, we have to go back to 1914.
The town was broke, so it opened a saloon
In 1914, Sturgis had a problem. The city was $62,000 in debt, which was reportedly beyond its constitutional debt limit. So a group of local businessmen came up with an unusual solution: sell booze.
Fourteen businessmen organized what was called the Sturgis Municipal Company. They sold shares for $10 each, borrowed another $3,000 to pay for licenses, and opened a single saloon. The idea was simple: the saloon would make money, and the profits would be used to retire city warrants.
And apparently, it worked.
According to a 1934 Deadwood Pioneer-Times retrospective, the saloon operated for about two years and earned roughly $1,000 a month in profit. The city’s financial situation improved enough that Sturgis was able to float a refunding bond issue without trouble. This wasn’t simply a saloon that happened to be profitable; its purpose was to use alcohol sales to help get Sturgis out of debt.
There was, however, a problem that even a profitable saloon couldn’t overcome: South Dakota was going dry. The municipal saloon was eventually forced out of business following the state’s 1916 prohibition amendment.
That might have been the end of the story. Instead, nearly twenty years later, Sturgis decided to try it again.
Prohibition ends, and an old idea comes back
National Prohibition ended in 1933. Almost immediately, states had to decide what legal alcohol sales would look like. South Dakota’s legislature passed a new liquor-control law in 1935, which included a provision allowing municipalities to operate their own liquor stores if local voters approved.
For Sturgis, this wasn’t really a new idea. They had already tried it.
But before the city could resurrect its old experiment, South Dakota Attorney General Walter Conway threw a wrench into the plan. He ruled that the municipal-liquor section of the law was void because of problems with the legislation’s wording.
That created a strange situation. The legislature had seemingly authorized cities to sell liquor. The attorney general said the provision allowing them to do so was invalid. Meanwhile, communities around South Dakota were already preparing to vote on whether they wanted municipal stores.
So they voted.
Belle Fourche approved the idea 502 to 289. Newell approved it overwhelmingly, 151 to 15. Then came Sturgis. On April 16, 1935, Sturgis voters approved municipal liquor sales by a majority of roughly 400 votes.
The Weekly Pioneer-Times noted something particularly interesting about the result. Rapid City, Spearfish and Hot Springs had all rejected municipal liquor sales. Sturgis was the only Black Hills community to vote yes that day.
Sturgis went its own way.
There was still the small matter of whether this was legal
Two days after the election, the Sturgis City Council was already preparing for what came next. The council instructed the mayor to attend a meeting in Pierre concerning the municipal liquor question, which was about to go before the South Dakota Supreme Court.
The next day, Sturgis filed applications for both an off-sale liquor store and an on-sale establishment.
The distinction here is important.
The city’s Class O, or off-sale, application listed a building on Lot 16, Block 13 of the Original Town of Sturgis. Its Class E, or on-sale, application listed a building on Lot 5, Block 16.
Both properties belonged to Nick Schummer.
Schummer had already entered the liquor business discussion before the election. On April 1, he was one of four private applicants seeking Class E on-sale permits. The council deferred action on those applications. Then, after voters approved municipal liquor, the city itself applied for an on-sale license at Schummer’s Lot 5 property.
For at least a short time, then, Sturgis was planning more than a package liquor store. It intended to operate both an off-sale store and an on-sale establishment.
The plan was still moving forward on May 2. The council adopted a resolution governing the proposed municipal “On Sale Liquor Store,” requiring it to occupy a ground-floor room with an unobstructed view through the windows. The resolution specifically stated that the on-sale business would be conducted by the City of Sturgis.
But that isn’t what ultimately opened.
At the May 20 council meeting, officials reported that the City of Sturgis had been issued a Class O license on May 18. The council then chose a manager for what the minutes called the “Sturgis Liquor Store,” established a liquor-store account, and transferred $1,200 from the General Fund into it as a revolving fund.
There is no corresponding record of the city’s Class E license being issued. The licensing records afterward continue to identify the municipal operation as Class O. In December 1936, for example, the council specifically authorized another application for a “Class O License” for the Sturgis Liquor Store.
Schummer’s private Class E application followed a similar path. The council deferred it in April and ultimately did not approve it. On June 3, however, the council approved Schummer for a Class D beer permit for the ensuing year.
So the distinction is clearer than it first appears. Sturgis planned both an on-sale establishment and an off-sale liquor store in the spring of 1935. The operation that actually emerged was the Class O off-sale store.
And that changes the geography of the story.
Lot 5, Block 16 was the proposed location of the city’s on-sale operation. The municipal liquor store that actually opened was in Schummer’s building on Lot 16, Block 13.
Meanwhile, the larger legal question had reached Pierre. On April 24, the City of Pierre brought an action before the South Dakota Supreme Court seeking to force state officials to issue licenses for municipal liquor operations. The resulting case was City of Pierre v. Siewert.
The issue sounds complicated, but the key question for Sturgis was fairly simple: could South Dakota legally allow a city to enter the retail liquor business if its voters wanted it to?
The court said yes.
The justices concluded that the disputed section created a valid, workable system for municipalities to sell liquor when their voters approved it. The attorney general’s objection had failed. Sturgis voters had voted to put their city into the liquor business, and now the state Supreme Court had cleared the way.
A follow-up case the next year established an important limitation. The town of Isabel attempted to force the state Liquor Control Commission to approve its own municipal liquor license. The court held that the law’s petition requirements effectively limited municipal liquor operations to first- and second-class cities rather than third-class towns. Sturgis, already operating as a second-class city, was unaffected.
So who do you hire to run a city saloon?
Sturgis now needed someone to run the operation. Fortunately, the city knew a guy.
On May 22, 1935, the Rapid City Journal announced:
“OLD TIMER TO RUN STURGIS SALOON”
That old-timer was August Bauer. And Bauer wasn’t simply an experienced saloonkeeper. He had been the proprietor of Sturgis’s old municipal saloon before Prohibition.
The city had resurrected its old liquor business and brought back the man who had run the previous one.
City council minutes show that Bauer wasn’t the only candidate. Several applications were presented, and the council voted. Bauer received five votes. Roy Ellerman received one. Bauer got the job.
Born in Germany in 1875, Bauer had immigrated to the United States in 1894, settled first in Piedmont, and moved to Sturgis in 1900. He would remain associated with the municipal liquor store for years.
The city had its store, and it had its manager. Now came the important question: would the thing actually make money?
Liquor built the sewers
The answer was yes.
During its first ten months, the store recorded $5,884 in gross sales and $1,588 in net profit. It soon became a regular part of Sturgis’s finances. By October 1935, the Municipal Liquor Store appeared in the city’s budget as an operating enterprise alongside another city revenue source, the Municipal Tourist Park.
And the money wasn’t simply sitting in a liquor-store account. In 1939, the city budget estimated $7,400 in income from the Municipal Liquor Store. That June, the council transferred $1,504.03 from the liquor-store fund into the Sewer Construction Fund.
Booze money literally poured into the sewers.
And the amount of money involved kept growing. In 1946, the Rapid City Journal reported that the store had earned a net profit of $11,011.06 between January 1 and July 20. The store’s assets even included $37,000 in United States bonds. By 1949 and 1950, city budgets carried a “Municipal Saloon” line of $90,000.
By the early 1960s, the operation had expanded substantially. A 1964 state audit reported that Sturgis’s municipal liquor outlets had produced a net profit of $108,000 for the year. Whatever one thought about a city government selling alcohol, it was difficult to argue that Sturgis wasn’t making money doing it.
There is also a good example here of why later retellings of history need to be treated carefully, though. At a Rapid City meeting in March 1935, Carl H. Rise claimed that Sturgis had once made $17,000 in only six months from its municipal store and had paid off its bonded indebtedness.
That story was already circulating before the new store even opened.
The problem is that the contemporary figures don’t support it. Rise appears to have been referring to the earlier 1914–16 operation, and the story became exaggerated along the way. The basic story was already remarkable enough. It didn’t need the embellishment.
The liquor store starts moving
The city owned the liquor business, but that didn’t necessarily mean it owned the building.
The original 1935 store operated from Nick Schummer’s building on Lot 16, Block 13. Sturgis was renting the property.
That arrangement ended in 1938. On August 1, the council instructed the city auditor to notify Schummer that the city would vacate his building on or before the last day of August.
At the same meeting, the council rented another building for $35 a month. The property was identified as the east fifteen feet of Lot 7 in the Original Town. Property records place the matching parcel in Block 15, where it had been owned by the O. M. Jewett Estate earlier in the decade.
The precise location of the liquor store during parts of the 1940s is less certain, but by 1950 the municipal liquor business had become more complicated than the single-package store Bauer had taken over in 1935.
The city was paying rent on two different buildings associated with its liquor operations. One belonged to Anna Leveque and housed the Key City Bar. Another belonged to Carl Lohman and appears to have housed the Municipal Liquor Store.
Then, in 1956, the city prepared to move again.
That May, Sturgis entered into an agreement to lease property from Florence Mumford in Block 1 of Allen’s Extension. The council described its goal plainly: it wanted “a suitable building for purpose of conducting lawful retail liquor business.”
The rent was $100 a month.
The building was remodeled for the city’s use, and by the early 1960s the addresses make the arrangement much clearer. The Municipal Liquor Store operated at 1004 Main Street, while the Municipal Lounge operated next door at 1006 Main Street.
The municipal liquor business was no longer a single store.
One liquor business becomes several
By 1962, Sturgis was operating four municipal liquor outlets: the Municipal Liquor Store at 1004 Main, the Municipal Lounge at 1006 Main, and a corner building housing the Key City Lounge (on-sale) at 1145 Main, and the Bottle Shop (off-sale), while in the rear of the same building, at 942 Second Street.
The Key City Lounge history is particularly useful because it shows how the city’s relationship with the liquor business was changing.
The 1145 Main property originally housed both on-sale and off-sale municipal operations. But in 1965, Sturgis voters decided the city should get out of the on-sale liquor business. The city sold the bar and its equipment to Oasis Bar & Lounge, Inc., while retaining the Bottle Shop portion of the property under a sublease.
The city was still selling liquor.
It just wasn’t serving it across the bar.
In June 1966, the Bottle Shop moved from 942 Second Street to 931 First Street. Once again, the city rented rather than owned the building. By 1981, the landlord was Dean McNenny, and rent had climbed to $375 a month.
But by then the Bottle Shop was no longer Sturgis’s only off-sale outlet.
The Southside Liquor Store
In 1968, the city decided it needed another outlet.
This time, instead of renting a building, Sturgis bought one.
On May 27, the council declared that the city was “in need of another outlet for its off sale liquor business” and identified a property on South Junction Avenue, formerly occupied by Sturgis Heating, as an ideal location.
The owner was William P. Lamberton.
Sturgis agreed to buy the property for $6,500. The city took possession and began remodeling it for liquor sales. By June, the council was processing an off-sale license for 2345 Junction Avenue.
The Southside Liquor Store was born.
For the first time in this later history, Sturgis owned the property beneath one of its liquor stores.
And almost immediately, the city began arguing about whether it needed two of them.
The city tries to close Southside
By the summer of 1969, Southside had been open for only about a year.
The council’s Liquor Committee concluded that operating two liquor stores was not economical and recommended closing the Southside store. The city could then retain the property for lease or another use.
Not everyone agreed.
Clarence Glover, Andrew Lund, Wayne Baker, Al Colton, Gerry Neugebauer, Robert Hobernicht and Robert Jolley appeared before the council and argued that both stores should remain open.
The council initially set Southside’s closing for July 1, then pushed the date to August 4 while opponents considered legal action.
But the closing never happened.
Mayor Joe Egger vetoed the resolution.
By November, city records again listed both locations as licensed: the Bottle Shop at 931 First Street and the Southside Liquor Store at 2345 Junction Avenue.
Sturgis had decided that two liquor stores were uneconomical.
Then it kept both of them anyway.
Trouble at the till
Of course, a city-run liquor business came with some of the same problems that could plague any other liquor business.
In April 1950, August Bauer, now 74 years old, was arrested and accused of selling liquor to a 17-year-old. After fifteen years managing the city’s new liquor operation, the old saloonkeeper was headed to court.
The case didn’t last long. A six-man jury tried Bauer on May 4. The jury deliberated for five minutes.
Not guilty.
Two years later, another problem appeared. An audit of the municipal liquor store found $548.34 missing from its accounts. According to the Deadwood Pioneer-Times, someone had apparently stolen the money from the till at various times.
That was minor compared with what happened in 1960.
The manager who disappeared
On September 1, 1960, Rudolph “Sonny” Eickhoff, manager of the municipal liquor lounge, disappeared. The timing was strange enough on its own: Eickhoff was supposed to be married two days later.
At first, auditors looking at the books reportedly found everything in order. Then they looked closer. A partial audit uncovered a shortage of $12,000.43 covering the period from September 17, 1957, through September 1, 1960. A complaint was filed, a warrant was issued, and Eickhoff was accused of embezzlement.
For more than two months, Eickhoff’s whereabouts remained unknown. In November, officers finally located him at a hiding place, but before they could take him into custody, Eickhoff shot himself in the head.
The Deadwood Pioneer-Times summed up the ending in a stark headline: “Suicide Ends Search for Sturgis Man.”
It was a grim chapter in what had begun as an experiment in municipal finance. But it didn’t end the experiment.
Other towns were watching
Sturgis wasn’t alone for long. In 1936, Spearfish residents petitioned for another vote on municipal liquor sales, noting that Belle Fourche and Sturgis were already realizing considerable revenue from their stores. Legal decisions eventually limited which municipalities could operate them, but the idea continued spreading.
By 1947, the politics surrounding municipal liquor had apparently become heated enough that supporters in Spearfish felt the need to reassure voters of something that probably wouldn’t appear in a modern liquor-store advertisement: supporting a city liquor store did not make you a communist.
A full-page advertisement in the Queen City Mail argued that residents of Belle Fourche, Newell, Sturgis, Hot Springs, Pierre and other South Dakota cities had not been communists when they approved municipal liquor. Spearfish residents, the ad assured them, would not become “reds” either.
By then even Hot Springs, which had rejected municipal liquor in 1935, had adopted it.
Sturgis’s own store wasn’t exactly hiding what it was doing either. A 1949 advertisement for the Key City Rodeo invited visitors looking for “Fine Refreshments” to visit the STURGIS MUNICIPAL LIQUOR STORE AND BAR.
There wasn’t even an address in the advertisement. Apparently, if you were in Sturgis, you knew where to find it.
Could the state shut it down?
The municipal store survived another serious challenge in 1971. This time the threat came from the South Dakota Legislature, where a proposal would have outlawed municipal liquor stores altogether. Had it passed, Sturgis would have been forced out of a business it had been operating since 1935.
The Senate killed the proposal.
Sturgis, meanwhile, continued investing in its liquor operation. By the mid-1970s, the city was considering replacing its existing facilities with something larger.
In 1975, the council selected the former LaBelle Creamery property as the site for a proposed new liquor store. The existing Bottle Shop was rented, its lease was approaching expiration, and the building was considered too small. The proposed replacement was expected to cost roughly $70,000.
It wasn’t built.
The idea, however, didn’t disappear.
From two stores to the Toddy Shoppe
By 1981, Sturgis still had the same basic two-store arrangement that had survived the 1969 fight: the rented Bottle Shop at 931 First Street and the city-owned Southside store at 2345 Junction.
But the Bottle Shop lease was becoming a problem again.
The city knew its lease at 931 First was expiring. Negotiations with property owner Dean McNenny eventually produced a temporary extension at $375 a month, but the council’s longer-term plan was much more significant.
Sturgis would build a new liquor store and sell Southside.
Construction moved forward in 1982. The city hired Cemcon for the new building, approved exterior changes, purchased new wine displays and gondola shelving, and prepared to leave the rented Bottle Shop before August.
This time, unlike the rented stores that had preceded it, Sturgis was building a liquor store of its own.
By the end of the year, it had a name.
On December 20, 1982, the council approved payment for a sign identifying the new municipal liquor store as:
THE TODDY SHOPPE
The new store consolidated a system that had spent years operating from two locations. The rented Bottle Shop was gone, and the city declared the Southside property surplus.
In 1983, the city accepted Arthur R. Heinrich’s $30,000 cash bid for the former Southside property.
The municipal liquor operation was now concentrated in the city’s new store.
By 1985, city licensing records explicitly identify the Toddy Shoppe at 1075 Lazelle Street.
The modern location had arrived.
The city is still selling booze
The most remarkable part of the story may be how ordinary the arrangement eventually became. What was controversial enough in 1935 to require an election, an attorney general’s opinion, and a South Dakota Supreme Court case eventually became just another part of city government.
The name changed over the years. Newspapers called it the “municipal saloon” in the 1930s. Its own 1949 advertisement used “Sturgis Municipal Liquor Store and Bar.” Later, it became the Municipal Liquor Store, Municipal Lounge, Bottle Shop, and Southside Liquor Store. In 1982, the city christened its new store the Toddy Shoppe. Eventually the name drifted back toward the more straightforward Sturgis Liquor.
But the basic business survived.
The city’s 2025 budget treats the liquor store as an enterprise fund; a separate business whose profits can be transferred into the city’s General Fund. For 2025, Sturgis projected about $3.3 million in off-sale liquor, beer and wine revenue and planned to transfer $230,000 from the liquor operation into the General Fund.
The modern store operates at 1075 Lazelle Street, and the city also holds an off-sale license for a Sturgis Liquor Annex. During the motorcycle rally, demand became great enough that the city pursued an additional satellite location. As manager Tom Ferguson put it in 2013, there were times during the rally when the store felt “like sardines in a can.”
That is a long way from fourteen businessmen selling $10 shares to help a debt-ridden little town in 1914. But there is a straight line connecting the two.
Sturgis had a financial problem. Selling liquor seemed like a way to make money.
It worked.
Prohibition ended the first experiment. When legal alcohol returned, Sturgis tried the idea again. The attorney general objected. The voters approved it. The Supreme Court allowed it.
The business moved from Schummer’s rented building to other rented storefronts. It expanded into multiple municipal outlets. Sturgis bought Southside, tried to close it, kept it open, and eventually replaced its two-store system with a purpose-built liquor store of its own.
More than a century after Sturgis first experimented with using saloon profits to help pay its bills, and more than ninety years after voters put the city back into the liquor business, the city is still doing essentially the same thing.
Sturgis didn’t just legalize the sale of booze.
It became the liquor dealer.