The narrow three-story building in downtown Minneapolis has been home to Runyon's bar for decades, but the letter "M" embedded in an ornamental cornice on its top floor gives a hint to the building's original occupant.

It was built in 1895 as a "tied house" of the Minnesota Brewing Company. Tied houses were saloons that were required to serve only one company's beer or were owned outright by breweries.

As Prohibition approached, tied houses became the dominant form of saloon in Minneapolis and exerted powerful influence over politics and society.

It all started with operations not that different from today's taprooms, as companies sold beer directly out of their breweries, said Doug Hoverson, author of "Land of Amber Waters: The History of Brewing in Minnesota." While modern taprooms market the distinctiveness and craft of the beer, the purpose of tied houses was to hold on to consistent customers.

"It was an attempt to capture as much of the market by getting a tied house right next to a factory, or getting it on the corner location right in the middle of the ethnic neighborhood," Hoverson said. "Location was much more important than product."

Competition squeezed local breweries

A Minneapolis saloon tied to Schlitz Milwaukee beer, address unknown. Courtesy Minnesota Historical Society

In the 1880s, competition got tougher for Minneapolis breweries as refrigeration technology allowed breweries in other cities to ship beer longer distances. The entry of Milwaukee brands like Schlitz into the Twin Cities motivated smaller local breweries like Gluek Brewing Company to open tied houses in an effort to preserve their customers.

The first tied houses were likely contracts in which brewers paid independently-operated saloons to only serve the brewery's beer. But the breweries quickly expanded to renting out furniture and building their own tied houses with a local resident listed on the paperwork as proprietor.

In Minneapolis, the tied houses were concentrated in the city's liquor patrol districts, which included downtown, the Cedar-Riverside Neighborhood and parts of northeast Minneapolis. But tied houses could be found in almost every neighborhood. It became common practice for breweries to snap up desirable land like corner lots on busy streets, either to build tied houses or to prevent competitors from building them.

It was common practice at the time to provide working men a free lunch with purchase of a beer. Tied houses supported by powerful breweries offered some of the most generous free lunches. They also lured people in by offering to cash checks, with the expectation that some of the money would be spent at the saloon.

By 1908, the tied houses had become so common that only 38 of 432 official saloons in the city were actually run independently, according to Hoverson's research. The Minneapolis Brewing Company ran 131 saloons; Gluek Brewing Company ran 86 saloons and Purity Brewing Company ran 38 saloons. Other companies like Schlitz and Miller also ran saloons in the city.

The number of breweries in Minnesota plummeted because of consolidation in the early years of the 20th century. Because there were so few large local breweries competing for business against giant breweries from the Milwaukee area, the Twin Cities had perhaps the largest concentration of tied houses in the region, Hoverson said.

"It ended up being a really important real estate thing for a lot of these companies," Hoverson said. "They would snap up corner lots whenever they could and many of them actually had to develop their own real estate companies to deal with all the properties they ended up with."

Tied house boom fueled anti-alcohol sentiment

The explosion of saloons caused some public alarm, and may have contributed to anti-alcohol sentiment. Newspaper accounts of the time editorialize on the "saloon question" and report on hundreds of drunken Minneapolis residents traveling to St. Paul saloons after Minneapolis closed saloons on Sundays.

One policing method popular across the country was to drastically increase saloon licensing fees in an attempt to run some of the smaller saloons out of business.

"It backfired because what it did was drove out independent operators, and the only way proprietors could pay the licensing fees was to get a brewery sponsorship," Hoverson said.

A Minneapolis saloon tied to Val Blatz beer, address unknown. Courtesy Minnesota Historical Society

Many of the tied houses built by breweries were meant to counter assertions that saloons were a negative influence and showcase the power and wealth of the breweries, Hoverson said. The ornate buildings included features like stained glass, pressed tin ceilings or architectural oddities like the triangle-shaped bar in the Minneapolis Cedar-Riverside neighborhood, for which Gluek Brewing Company hired prominent Minneapolis architect Warren Dunnell.

The most active breweries tended to build their tied houses in one main style, which is why a Gluek Brewing Company tied house in downtown can look similar to one built in northeast Minneapolis.

As public sentiment against alcohol increased, a number of local ordinances in the state cut off or restricted sales of alcohol. An Anti-Saloon League report found that the number of official saloons in the state between 1914 and 1918 fell by about half.

"While the tied-house system offered brewers advantages in distribution and sale of their product, the system was flawed in that it laid the social problems associated with alcohol and saloons on the brewer's doorstep," according to Chicago's report on tied houses. "Rather than merely brewing beer, breweries began to be regarded as giant and soulless monopolies. "

The approach of World War I also complicated matters for the breweries. A dry Wisconsin politician named John Strange summed up how anti-beer sentiment combined with anti-German sentiment as World War I approached: "We have German enemies across the water," Strange said. "We have German enemies in this country, too. And the worst of all our German enemies, the most treacherous, the most menacing, are Pabst, Schlitz, Blatz and Miller."

Most of the tied houses never reopened under brewer control following the repeal of Prohibition and the creation of the three-tiered alcohol distribution system that bans brewery ownership of bars.

Tied houses and taprooms

The earliest breweries left the cities dotted with remnants of the tied house era, although many of the buildings were demolished, in particular during the city's efforts to renew the Gateway District in the early 1960s, where almost 200 buildings were razed in 17 blocks of downtown.

Other tied houses have been the victims of more recent development. The Star Tribune extensively covered the debate about whether to preserve a former Gluek Brewing Company tied house in the Cedar-Riverside neighborhood, which was eventually demolished to make way for an apartment development.

Although the city never completed a comprehensive assessment of how many tied houses remain in Minneapolis, a 2012 report found that at least eight of the original 86 Gluek Brewing Company tied houses still stand.

Polsky Saloon at 229 Main St. NE served the Glueck Brewing Company's beer. Courtesy Minnesota Historical Society

Although tied houses sound similar to taprooms of today, taprooms are required to be on brewery premises and are restrained by the three-tiered alcohol distribution system set up after Prohibition.

"For a lot of the peak of the tied house era, beer was essentially a commodity without a lot of the distinctive qualities that anyone but an expert could determine, it was just a chance to capture as much of the market," Hoverson said. "The taprooms we have now are more a way to meet the brewer and be part of the brewing experience, and I think that's a lot of why people find these so exciting."

Another difference is that tied houses were the result of early consolidation of the brewing industry as large breweries sparred for market share. And all signs in Minnesota point to an ever increasing diversity of small brewers in the state since the so-called Surly Bill passed into law in 2011.

The Minnesota Department of Public Safety has predicted that the number of licensed breweries in the state will rise again this year to 111.

Map: Mpls. tied houses. Now and then photos.