Wartime Supply, Demand, Prices and Taxes
Halt to Liquor Production for War Alcohol
During the present year American liquor distilleries are turning out some 250 million gallons of 190-proof alcohol for use in the manufacture of synthetic rubber and smokeless powder—instead of 160 million gallons of whiskey and other hard liquors. All distilleries were diverted exclusively to war production by order of the War Production Board on October 18, 1942. The results of a year of this diversion have been a decrease of about 18 per cent in warehouse stocks of liquors; skyrocketing of retail prices, except in the 17 liquor monopoly states; virtual disappearance of familiar “name” brands in the package stores; increasingly stringent rationing to consumers in the monopoly states, and by distillers to distributors generally; and a general flooding of the retail market with rums and gins from the West Indies.
The average annual consumption of distilled liquors in the United States during the five years prior to cessation of liquor production (1938–42) was about 150 million gallons. in 1942, it was 190 million gallons. Per capita consumption showed an average annual increase of a little over three per cent during the years from 1937 to 1941, but in 1942 apparent consumption jumped 20 per cent over 1941, owing largely to anticipatory buying before a 50 per cent increase in federal liquor taxes became effective in November of that year. Per capita consumption in 1942 was 1.44 gallons—the highest rate for any year since prohibition repeal. In 1917, before prohibition, per capita consumption was 1.64 gallons; in 1913 it was 1.53 gallons.
Expenditures of the American people on alcoholic beverages, including beers and wines, have been estimated by Dean E. McHenry of the University of California to amount to $3 billion a year. The Distilled Spirits Institute estimated that total taxes on alcoholic beverages in 1942 amounted to $1,750 million, of which about $1,245 million went to the federal government, $467 million to state governments, and $38 million to local governments.