Alcohol Prices

[jbutler]

I helped a friend move recently, and in his old house we found a December 1945 issue of the Santa Rosa Press Democrat, our local paper (and now owned by the New York Times).

A couple advertisements caught my eye. One was a toy store ad heralding the latest "high tech" toys ... none of which costs more than $2.10. The other was a liquor store add which was interesting for a couple reasons.

First, it seems "brown" liquor was all the rage then. Vodka and gin got very little space in the add but "whiskey" constituted the bulk. Now to my point; the average price of a fifth of brown booze was $3.60 in the ad. We're talking Canadian Lord Calvert and Seagram's 7 here, there was nothing recognizable as "bourbon".It seems that prices are roughly about 2.5 times that level currently, meaning that alcohol has dropped considerably in price in the last fifty years.

Any Comments?

Cheers,

Jim Butler

Straightbourbon.com

[cowdery]

In 1945, there was a severe shortage of aged whiskey, due to prohibition and then the war. That probably explains why the ad was dominated by Canadians and blends. As for pricing, booze is not that expensive to make. The largest component in the pricing is taxes. I don't know if that explains anything or not.

--Chuck Cowdery

[Guest **DONOTDELETE**]

Jim,

I think Chuck is right here. The laws of supply and demand were in effect in 1945 with a very small supply due to the fact that the distilleries made very little drinking alcohol during the war (would have been none except some whiz kid discovered a way to make synthetic rubber using less alcohol and the government all of the sudden had a surplus), and a large demand with a prosperous economy in the U.S. due to the war industries.

Mike Veach

[Guest **DONOTDELETE**]

I know we have some economists out there. What would $3.60 be in today's dollars? If you wanted to buy that bottle of blended Seagram's 7 to go along with a nice steak dinner (say about $18.75 at Dagwood's today), how much would the dinner have cost?

=John=

http://w3.one.net/~jeffelle/whiskey

[AVB]

The US inflation from July 1945 to August 2006 is 1024% so the bottle would cost $36.86 and the dinner would be $192 for a total of $228.86 not counting tip

[scopenut]

By my calculations, the bottle would cost $40.46 today (inflation plus original cost of the bottle). Dinner costing $18.75 today would have cost about $1.67 in 1945.

-Kevin

[AVB]

I missed the dinner TODAY, I thought it was a 1945 dinner. Anyway, inflation is a percentage of change. Since you start with the original cost of the item you don't have to add it on at the end. In this case ($3.6 * 10.24)= $36.86. For the dinner it would be ($18.75 /10.24)= $1.83

[cowdery]

The Federal Excise Tax on spirits was $6 per proof gallon in 1945. It is $13.50 today so, inflation wise, we're getting a bargain on the tax, at least.

[scopenut]

I missed the dinner TODAY, I thought it was a 1945 dinner. Anyway, inflation is a percentage of change. Since you start with the original cost of the item you don't have to add it on at the end. In this case ($3.6 * 10.24)= $36.86. For the dinner it would be ($18.75 /10.24)= $1.83

Not to belabor a point, but as you say, inflation is the rate of change. If something costs a dollar today, and inflation rate is 100% per year, the end cost is $2, not $1. Hence you need to add on the original cost.

-Kevin

[photogjunkie]

Here is a site to figure the ugly side of inflation.

http://woodrow.mpls.frb.fed.us/research/data/us/calc/

[scopenut]

Thanks for the useful link!

-Kevin