Ethyl Alcohol was a known anti-knock additive to gasoline well before TEL became the 'answer' the latter largely pushed by the oil companies and producers.
Indeed, alcohol was popular as a fuel before gasoline and many early IC engines ran on alcohol fuels, without the later harmful emissions of gasoline with (or without) TEL.
However, when you have big business pushing their interests up against a fuel that could be 'brewed' at home, guess which won!
The history of TEL use in spite of known detrimental effects is as sordid a tale as that behind the promotion in use of asbestos.
And isn't that what is used nowadays too? At least some brands of cheaper gas started pushing "up to 10 percent" alcohol back in the Eighties if not sooner; I've heard rumors that some people believe it is bad for engines or something, stripping things away somehow as a solvent, but I've run cars on it that whatever other problems they may have had, no mechanic has ever pointed to alcohol as the problem.
I used to assume it was in the gas mainly for the same reason we use fructose derived from corn syrup--Earl Butz, maize subsidies and a bunch of Midwest and Plains states politicians pushing "gasohol" as an "Energy Crisis" solution in the 1970s. That is certainly a factor, but yes I have also read here and there it helps with engine knocking.
I suppose even the partially ethanol mixes also use something else to perfect the anti-knock properties for modern cars--though another thing about gasoline at least in the USA, it is traditional for all stations to offer three levels of gas at three different octane levels. I have never used anything but the cheapest grade; as I was advised back in 1989 or so, the high octane stuff made a performance difference in older model cars, from the '60s and '70s, but in modern cars such as those available in the 80s the engine would function just as well on 86 octane (lowest standard in the USA) as on the more expensive blends. I have rarely experimented to see if they make any difference in modern cars or not.
Anyway out of all discussion this seems like the most promising option for an alternative to lead compounds being either pushed by a serious if not regulation mandated social crusade, or of course better yet a simple legal ban of the lead option on health grounds.
Much depends on
1) how acceptable is the performance of gasoline mixed with some quantity of ethyl alcohol, versus the gains available with lead? Is the right mix actually as good or superior to lead additives? A subset of this is, that modern cars can soldier though with a standard mix but 1920s type engines would benefit from a variable mix, with more alcohol being added in some running conditions and less in others, how tricky would it be to develop dual tanks and a system for manually or automatically varying the mix, much as I proposed using variable amounts of hydrogen in diesel engines?
Also--the big difference between classic car engines and modern ones is that the latter are computer controlled and this makes fuel injection systems more workable versus the classic solution of a carburetor vaporizing regulated percentages of fuel into the intake air for compression for spark ignition. I suspect the pragmatics of gasohol, especially getting the mix right in all conditions, is much better with fuel injection than with carburetors. BUT prior to the extensive and sophisticated modern electronic controls we now have as standard, getting the mix right was a complicated science that normal motorists could not be expected to learn easily, and hand controls to enable the human brain to do what the solid state computers of today do, even the relatively primitive ones of 1980s standards. It was also a more expensive thing to manufacture even if some simple and durable mechanical computer could do the job of metering correctly. We went over to computer controlled fuel injection in part to meet emissions standards and performance in the context of having to meet emissions standards, as well as to achieve fuel economy.
In short, I suspect ethyl alcohol was known to be helpful but also tricky to use with old style engines, which are the only practical ones in the timeframe indicated; it works fine in a standard ratio now because we have engines designed for it but doing so might not have been cost-effective in the 1920s. Anyone know these technical details?
2) Zman's claim that the uses of alcohol in fuel were well known already in the '20s seems plausible to me, especially if there were drawbacks then that we have overcome since. But can anyone confirm this?
3) Take note we are talking about ethyl alcohol, the same stuff people drink to get drunk in beer, wine, and hard liquor, when the major and pioneering car makers and markets were in the USA, in a decade when the government was on a crusade to ban all alcohol consumption, which was massively resisted by criminal means very large minorities who might actually have been moderate to large majorities did not regard as criminal except in the sense that the law would punish you--but they regarded the law rather than its claims against the violators as the unjust ones. Combine this with the sad desperations that people who suffer from alcoholism exhibit, and in the context of Prohibition there would be no practical way to use this alcohol, or other alcohols for that matter. Between criminal but pervasive diversion of good clean ethanol stocks to illegal booze sales (not to mention the public health and safety impacts of people who used to be satisfied with the alcohol concentrations of typical whiskey or even beer suddenly finding 100 percent pure, 200 proof, pure alcohol their most available option) and the even worse consequences of people suffering severe alcohol craving throwing all remaining caution to the winds and simply drinking mixes that are mainly gasoline for the booze mixed in it (well, technically they'd be huffing I guess) it seems plain that in the 1920s any mention of the word "alcohol" would kill a proposal to favor it dead to any and all legislators, perhaps especially those working on decriminalizing alcohol again for human consumption.
No matter what the law says, if we have pure ethanol widely available, people will tend to pirate it for booze even if additives are put in it to discourage that, not to mention questions of integrity of the manufacturers really poisoning all their output and not shunting some aside on the QT. If there is never any Prohibition (and actually the national enforcement of it was merely the capstone of a successful movement over decades and generations to Ban The Booze that had produced a plethora of state and local prohibitions, one that had a small but noticeable political party associated with it too, so even before 1920 a lot of "Dry" jurisdictions existed and presumably would even with a very early POD) perhaps with legal alternatives both cheaper and safer as well as more palatable predation of fuel alcohol might be a fringe abuse. I think in the context of Prohibition it would lead straight to disaster, and even after Prohibition is repealed (and again, it hasn't been entirely--many local jurisdictions remain more or less strict) the warping and honing of the booze thirsty scrounging habits would make ethanol in fuel almost as dangerous despite the renewed legal alternatives.
Again I have to suggest, a POD with an abortive Great War, or none at all (very hard to do, the world was shambling toward the conflict in accordance with deep drives and lacking mechanisms to avoid it well) might be key here. It was wartime related politics that put Prohibition in the form of a National Amendment mandating it universally over the top. If the USA does not enter the Great War, perhaps this "Noble Experiment" would never be undertaken on a national scale and thus use of alcohol as a fuel additive will seem less problematic.