Let’s say you’re a bootlegger during Prohibition. There is this massive demand for alcoholic beverages that nobody can satisfy but you. People that before didn’t care about drinking now drink for the thrill of it, and they don’t much care about the quality of the alcohol as long as it is intoxicating.
Sounds like a businessman’s paradise, uhu?
Oh, but wait. To produce the liquor that will meet that demand, you need work and time. Say, for example, you want to make whiskey. You need to distil grain alcohol, water and juniper berries (which means you need a distillery) and then you need to age it for at least several months, which means you need a cellar and a vast number of casks, and to wait while other sell their stuff.
Sounds like hell.
No, no, no, wait. You don’t want to make whiskey at all. What you want is taking the same ingredients, mix them in a jug, steep them for a while… and you’re done. You can have all the gin you want without any fuss. And not only that. Since a kid would be able to do that, you have a whole network of people who will do it for you.
Ah, now it sounds like paradise again!

This is what gin was during Prohibition: the paradise of bootleggers. It was cheap, easy and fast to make and anybody could produce it. In fact, a lot of families did, they made their own and some more to sell to bootleggers. It was what was called bathtub gin.
Contrary to common belief, this kind of homemade gin wasn’t mixed in bathtubs. It was actually mixed in jugs, but because it required a big amount of water and alcohol, these jugs were too big to fit under the sink tub, so a bathtub was used instead.

While getting water and fruit juice wasn’t difficult, getting alcohol was a completely different story. If you were lucky, you could get alcohol legally with a prescription. This would be ethylic alcohol, which in moderate amounts is fit for human consumption. But mostly you – and the unfortunate souls who drank your gin – weren’t that lucky. You would most likely get your alcohol from bootleggers, and that not only was illegal but also very dangerous.
Alcohol was still produced in the US during Prohibition for industrial purposes. This alcohol was denaturated (made unfit for consumption) by adding methanol, which is poisonous and may cause blindness and even death if drunk in quantity. Bootleggers would divert denaturated alcohol from industries and with a fast, often not too reliable process made it drinkable again, then sold it.
Very often, this alcohol was still not suited for human consumption, and if fact wood alcohol caused many deaths and illness during Prohibition.

Even when the alcohol used was safe, though bathtub gin tasted horrible, people still wanted to drink it. So bartenders in speakeasies and blind pigs and any other hole that sold alcohol would add tonic water, juices of any kind, bitters, sugar, in fact, anything that could mask the horrid taste. They called these cocktails, like the ones mixed before Prohibition, although they didn’t taste anything like the cocktails of old.

RESOURCES

A Smile and a Gun – Coroner’s cocktails and Yak Yak Bourbon: the Worst Drinks of Prohibition
Distilled History – The Submarin Bar Shooting
NPR Books – Prohibition Life: Politics, Loopholes and Bathtub Gin

Behr, Edward, Prohibition. The Thirteen Years That Changed America. Penguin Group & BBC Enterprises, London, 1997
Okrent, Daniel, Last Call. The Rise and Fall of Prohibition. Scribner, New York, 2010