The Economic Results of Prohibition 9780231893404

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STUDIES IN HISTORY, ECONOMICS A N D PUBLIC LAW Edited by the FACULTY OF POLITICAL SCIENCE OF COLUMBIA UNIVERSITY

NUMBER 379

THE ECONOMIC RESULTS OF PROHIBITION BY

CLARK WARBURTON

THE ECONOMIC RESULTS OF PROHIBITION

BY

CLARK WARBURTON, PH.D.

NEW YORK

COLUMBIA UNIVERSITY PRESS IYONDON : P . S . K I N G 4 SON, L T D .

1932

Cnl'YKICHT,

I9J2

BY

COLUMBIA

PRINTED

IN

UNIVERSITY

I HE UNITED

PRESS

STATES OF

AMERICA

PREFACE This study of the economic results of prohibition was initiated early in 1929 at the request of the Association Against the Prohibition Amendment, and I am indebted to the Association for financial support during the first few months of the investigation. The major part of the work has been done during the past two years, since the termination of my connection with that organization. The paper read by Mr. John C. Gebhart before the American Statistical Association at Washington, D. C., in December, 1929, and published for the Committee on Social Statistics of that Association in Statistics in Social Studies, and the pamphlet published by the Association Against the Prohibition Amendment entitled " D o e s Prohibition P a y ? " were based in part upon a preliminary report which I presented to that Association.* Since the publication of this paper and pamphlet all of my estimates and analyses have been revised; and all figures, tables and statements taken from my report are replaced, so far as my responsibility f o r them is concerned, by revised computations and conclusions given in this book. I wish to thank Mr. John C. Gebhart f o r suggestions as to sources of information, Mr. John Parker for the collection of much material from library sources, and the many trade associations, business firms, and newspaper * T h e parts of these studies which are based on this preliminary report are as f o l l o w s : Statistics in Social Studies, pp. 133-148; and Docs Prohibition Payt the section on liquor consumption, pp. 6-15, and that on increase in savings, pp. 21-24 and p. 37.

5

6

PREFACE

editors and reporters who have responded to my inquiries and without whose co-operation it would have been impossible to assemble much o f the information in the study. Professors W e s l e y C. Mitchell, H a r o l d Hotelling and Joseph D o r f m a n have contributed helpful advice.

I am especially

indebted to P r o f e s s o r A r t h u r R . B u r n s for his painstaking care in reading the entire manuscript and proof and f o r his many valuable suggestions and criticisms. I t is not likely that the tables and figures presented in this book are entirely free f r o m error, especially as I have had no assistance in checking the accuracy o f transcripts or the hundreds o f thousands o f computations

involved

in the statistical analysis; but I feel sure that no such errors are sufficiently great to affect the conclusions drawn f r o m the data and the analysis. It has been my aim throughout the study to be strictly impartial as to the merits of prohibition and to analyze without bias the statistical evidence regarding its effects. CLARK WASHINGTON, D . C . , SEPTEMBER, 1 9 3 2 .

WARBURTON

CONTENTS PACE

INTRODUCTION: Economic Aspects of Prohibition P A R T THE

17

O N E

CONSUMPTION C H A P T E R

OF

ALCOHOL

I

P R E - P R O H I B I T I O N C O N S U M P T I O N OF A L C O H O L I C B E V E R A G E S . . C H A P T E R

23

II

C O N S U M P T I O N OF A L C O H O L I C B E V E R A G E S U N D E R

PROHIBITION:

E S T I M A T E FROM S O U R C E S O F P R O D U C T I O N

Consumption of Beer Consumption of W i n e . . Consumption of Spirits Industrial alcohol Corn sugar Corn syrup and corn starch Corn meal C o r n , rye and other grains Cane and beet sugar Molasses Malt syrup Fruits and vegetables Total production of beverage spirits Smuggled spirits Medicinal alcohol Consumption of alcoholic spirits C H A P T E R

27 34 40 40 49 54 54 56 57 63 65 65 66 67 68 69

III

C O N S U M P T I O N OF A L C O H O L I C B E V E R A G E S U N D E R

PROHIBITION:

E S T I M A T E FROM D E A T H R A T E S

73

A l c o h o l consumption and death rates in the United K i n g d o m . . A l c o h o l consumption and death rates in Denmark A l c o h o l consumption and death rates in the United States . . . .

7

74 81 84

8

CONTENTS PAGE CHAPTER

IV

CONSUMPTION OP ALCOHOLIC BEVERAGES UNDER PROHIBITION: ESTIMATE FROM ARRESTS FOR DRUNKENNESS . . . . CHAPTER

99

V

CONSUMPTION OF ALCOHOLIC BEVERAGES UNDER PROHIBITION: COMPARISON OF ESTIMATES 104

PART THE

T W O

E F F E C T OF PROHIBITION CHAPTER

UPON

EXPENDITURES

VI

PRE-PROHIBITION EXPENDITURES FOR ALCOHOLIC BEVERAGES T h e National Liquor Bill P r e - p r o h i b i t i o n p r i c e s of a l c o h o l i c b e v e r a g e s A n n u a l liquor bill prior t o p r o h i b i t i o n

.

B u s i n e s s fluctuations a n d t h e liquor bill I n f l u e n c e of p r i c e c h a n g e s F a m i l y and G r o u p E x p e n d i t u r e s for L i q u o r

ill 111 113 115 118 119

A v e r a g e p e r c a p i t a and per f a m i l y e x p e n d i t u r e

119

Regional expenditures I n f l u e n c e of u r b a n life

120 121

I n f l u e n c e of a g e , s e x a n d m a r i t a l status

121

I n f l u e n c e of n a t i o n a l i t y

122

I n f l u e n c e of o c c u p a t i o n I n f l u e n c e of p e r m a n e n t p o v e r t y and e c o n o m i c status I n f l u e n c e of f a m i l y i n c o m e s L i q u o r E x p e n d i t u r e s by E c o n o m i c Classes D i s t r i b u t i o n of p o p u l a t i o n a m o n g t h e p r i n c i p a l e c o n o m i c classes

125 125 127 130 130

C l a s s c o n s u m p t i o n of a l c o h o l i c b e v e r a g e s C l a s s e x p e n d i t u r e s upon a l c o h o l i c b e v e r a g e s A l l o c a t i o n of t h e liquor bill in 1910 a m o n g t h e p r i n c i p a l e c o n o m i c classes . . . CHAPTER

132 134 137

VII

EXPENDITURES FOR ALCOHOLIC BEVERAGES UNDER PROHIBITION P r o b a b l e L i q u o r B i l l in t h e A b s e n c e of P r o h i b i t i o n

139

L i q u o r bill for 1921-1930 as p r e d i c t e d f r o m c o n d i t i o n s of 19111914

140

CONTENTS

9 PAGE

L i q u o r bill f o r

1 9 2 1 - 1 9 3 0 a s p r e d i c t e d f r o m t h e t r e n d in t h e

p r o p o r t i o n of t h e n a t i o n a l i n c o m e s p e n t o n l i q u o r Actual Liquor Bill Under Prohibition

150 151

P r i c e s of a l c o h o l i c b e v e r a g e s

152

L i q u o r bill u n d e r p r o h i b i t i o n

165

E f f e c t of P r o h i b i t i o n u p o n E x p e n d i t u r e s f o r L i q u o r CHAPTER

168

VIII

PROHIBITION AND THE SHIFTING PATTERN OF CONSUMPTION.

172

C o n s u m p t i o n of a n d e x p e n d i t u r e u p o n s e l e c t e d a r t i c l e s

173

R e l a t i o n of p r o h i b i t i o n t o s a v i n g s

180

Substitutes for beer

184

PART OTHER

ECONOMIC

T H R E E

P H A S E S OF

CHAPTER

PROHIBITION

IX

PROHIBITION AND INDUSTRIAL EFFICIENCY E f f e c t of d r i n k i n g u p o n e f f i c i e n c y

195

S t a t i s t i c a l e v i d e n c e r e g a r d i n g t h e e f f e c t of p r o h i b i t i o n u p o n p r o ductivity

196

E f f e c t of p r o h i b i t i o n u p o n i n d u s t r i a l a c c i d e n t s

199

E f f e c t of p r o h i b i t i o n u p o n a b s e n t e e i s m

203

E f f i c i e n t use of p r o d u c t i v e r e s o u r c e s

206

CHAPTER

X

PROHIBITION AND PUBLIC HEALTH AND SAFETY E f f e c t of p r o h i b i t i o n u p o n d e a t h s d i r e c t l y a s s o c i a t e d w i t h t h e u s e of a l c o h o l

212

E f f e c t of p r o h i b i t i o n u p o n t h e g e n e r a l d e a t h rate a n d t h e d e a t h rate f r o m t u b e r c u l o s i s

217

E f f e c t of p r o h i b i t i o n u p o n a u t o m o b i l e a c c i d e n t s

221

E f f e c t of p r o h i b i t i o n u p o n c r i m e

223

CHAPTER

XI

PROHIBITION AND ECONOMIC GROUPS F a r m i n g class

228

W a g e - e a r n i n g class

233

Business, professional and salaried class

237

P r o d u c e r s of a l c o h o l i c b e v e r a g e s

242

CONTENTS

IO

PAGE C H A P T E R

XII

PROHIBITION AND P U B L I C

FINANCE

Cost of e n f o r c i n g prohibition L o s s of g o v e r n m e n t r e v e n u e s

245 248

I n c i d e n c e of liquor t a x a t i o n

254

PART FOUR SUMMARY

AND

CONCLUSIONS

C H A P T E R

XIII

E C O N O M I C R E S U L T S OF P R O H I B I T I O N

E f f e c t of prohibition upon the consumption of alcoholic b e v e r a g e s .

259

E f f e c t of E f f e c t of E f f e c t of E f f e c t of finance

260 261 261

prohibition prohibition prohibition prohibition

upon upon upon upon

national e x p e n d i t u r e s industrial efficiency economic groups public health and safety and upon public .

262

BIBLIOGRAPHY

264

INDEX

271

LIST OF TABLES TABLE

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

PAGE

P e r capita c o n s u m p t i o n of alcoholic b e v e r a g e s in the U n i t e d S t a t e s , 1840 to 1922 A v e r a g e annual per capita c o n s u m p t i o n of alcoholic liquors in various c o u n t r i e s , 1910-1914 U s e of hops in the U n i t e d States E s t i m a t e d production of beer in the U n i t e d S t a t e s , 1921 t o 1931 E s t i m a t e d c o n s u m p t i o n of beer in the U n i t e d S t a t e s , T921 to IQ3I E s t i m a t e d c o n s u m p t i o n of illegal beer, 1921 to 1930 P r o d u c t i o n and use of grapes in the U n i t e d S t a t e s , 1899, 1909 and 1917 . E s t i m a t e d production of w i n e in the U n i t e d States, 1921 to 1931 (first m e t h o d ) E s t i m a t e d production of w i n e in the U n i t e d S t a t e s , 1921 to 1931 (second m e t h o d ) E s t i m a t e d c o n s u m p t i o n of w i n e , 1921 to 1931 U s e of industrial alcohol in the U n i t e d S t a t e s , 1907 to 1931. E s t i m a t e of alcohol used for automobile anti-freeze E s t i m a t e d diversion of industrial a l c o h o l , 1921 t o , i 9 3 l . . . . Industrial alcohol w i t h d r a w n , 1921 to 1 9 3 1 — i m p o r t a n t f o r m ulas not included in T a b l e 13 E s t i m a t e of b e v e r a g e spirits produced from diverted industrial alcohol U s e of corn sugar in the U n i t e d States, 1909 to 1930 . . . . P r o d u c t i o n of corn syrup and of starch, 1919 to 1930 . . . . P r o d u c t i o n and use of corn meal in the U n i t e d States. . . . F a c t o r s i n f l u e n c i n g the c o n s u m p t i o n of sugar in the U n i t e d S t a t e s , 1890-1916 F a c t o r s i n f l u e n c i n g the c o n s u m p t i o n of sugar in the U n i t e d S t a t e s , 1917-1930 E s t i m a t e of b e v e r a g e spirits produced from cane and beet sugar P r o d u c t i o n and importation of molasses U s e of molasses in the U n i t e d S t a t e s E s t i m a t e of beverage-spirit production in the U n i t e d States, 1921 to 1930 11

24 26 28 31 32 33 35 37 38 40 43 44 46 48 49 52 55 56 58 60 62 63 64 66

12 TABLE

25. 26. 27. 28. 29.

30. 31. 32. 33. 34. 35. 36. 37. 38. 39.

40. 41. 42. 43. 44. 45. 46.

TABLE

OF

CASES PACE

Relative importance of materials used in producing beverage spirits 67 Estimate of spirits smuggled into the United States . . . . 68 Medicinal alcohol used in the United States 69 Estimate of alcoholic spirits consumed in the United States, 1921 to 1930 70 Consumption of alcoholic beverages in the United States, 1921 to 1930: estimates obtained from sources of production 71 Consumption of pure alcohol in the United States, 1921 to 1930; estimates obtained from sources of production . . . 72 Alcoholic deaths as related to alcohol consumption in the United Kingdom of Great Britain and Ireland 75 Consumption of alcohol and the alcoholic death rate in Great Britain and Ireland 78 Coefficients of relationship in respect to the death rate from alcoholism and cirrhosis of the liver 80 Consumption of alcohol and the alcoholic death rate in Denmark 82 Alcoholic deaths as related to alcoholic consumption in the United States, 1910 to 1919 85 Consumption of alcohol and the alcoholic death rate in the United States, 1910 to 1919 86 Consumption of alcohol in the United States, 1920-1931, estimated from the death rate 89 Death rates in the United States, 1910 to 1929 90 Measures of relationship between alcoholism, cirrhosis of the liver, the general death rate and the consumption of alcoholic beverages, 1910-1919 - 9 1 Estimates of the consumption of spirits and of beer, 19101919, derived from death rates . . . . 97 Estimates of consumption of spirits and of beer. 1920-1929, derived from death rates. . . . 98 Consumption of spirits and convictions for drunkenness, England and Wales, 1891-1914 and 1919-1928. . 99 Arrests for drunkenness and the consumption of alcoholic beverages, United States, 1910-1919 101 Consumption of spirits and of pure alcohol, 1920 to 192g: estimates from arrests for drunkenness . . . 102 Estimates of the consumption of pure alcohol in the United States, 1920 to 1930 104 Estimates of the consumption of alcoholic beverages in the United States, 1920 to 1930 106

TABLE

OF

CASES

table 47. Consumption of alcoholic beverages in the United States before and after the adoption of prohibition 48. Wholesale prices of alcoholic beverages in the United States, 1890 to 1918. 49. Estimated retail prices of alcoholic beverages in the United States prior to 1915 . . . 50. Estimated expenditures on alcoholic beverages in the United States, 1890-1916 • . . . . 51. Estimated percentage of the national income spent for alcoholic beverages in the United States 52. Business fluctuations and the consumption of alcoholic beverages 53. Estimated expenditures per capita for alcoholic beverages, 1890-1916 54. Estimated expenditure per family for alcoholic beverages in the United States, 1890-1916 55. Reported expenditure for liquor by workingmen's families in geographical regions 56. Urban and rural death rates from alcoholism and cirrhosis of the liver . 57. Expenditures for liquor by all families, by " normal families," and by single men, in Bombay 58. Reported expenditures for liquor by nationalities: workingmen's families, 1890 59. Reported expenditures for liquor by income classes: European and American w o r k i n g m e n ' s families, 1890 60. Reported expenditures for liquor by workingmen's families in various industries, 1890 61. W o r k i n g m e n ' s family incomes and expenditures for liquor in the United States 62. W o r k i n g m e n ' s family incomes and expenditures for liquor in foreign countries 63. A n estimate of the number of unmarried males and of families in the principal economic classes in the United States, 1910 . . . . 64. Estimated division of the liquor bill a m o n g economic classes in 1910 65. T h e 1921-1930 liquor bill as predicted from conditions of 1911-1914 66. Prices of principal materials used in producing alcoholic beverages . 67. Estimated commercial costs of producing alcoholic beverages, 1914 and 1929, taxes excluded . . .

13 page 107 112 113 114 115 116 119 120 121 122 123 124 124 125 128 129

131 138 141 144 145

14 TABLE

68.

TABLE

OF CASES PAGE

Estimated probable post-war prices of alcoholic beverages had prohibition not been adopted 148 69. The 1921-1930 liquor bill as predicted from 1911-1914 consumption, 1921-1929 price level, and 1917-1919 rates of taxation 149 70. Estimated probable national expenditure for alcoholic beverages, 1920 to 1930, without national prohibition . . . . 151 71. Prices of alcoholic beverages in fourteen cities in December, 1929 152 72. Prices of alcoholic beverages at various places and dates . . 153 73. Prices of alcoholic beverages in J u l y , 1930, in the United States • • 155 74. Prices of beer in American cities in July, 1930 .156 75. Prices of wine in American cities in July, 1930 157 ;6. Prices of beverage spirits in American cities in July, 1930. . 158 77. Average prices of alcoholic beverages in the United States, 1929-1930 160 78. Index of price of gin in Washington and adjusted prices of alcoholic beverages in the United States 161 79. Estimated average cost to users of alcoholic beverages, 1929193 0 164 80. Estimated expenditures per capita upon alcoholic beverages, 1921-1930 166 81. Estimated total expenditures on alcoholic beverages in the United States, 1921-1930 167 82. Effect of prohibition upon the liquor bill 168 83. Effect of prohibition upon the amount spent for spirits, for wine and for beer 170 84. Apparent consumption per capita of selected articles . . . . 174 85. Apparent average annual percentage change in per capita consumption of selected articles 176 86. Estimated total consumer expenditure for selected articles. . 177 87. Total savings deposits in the United States, 1910 to 1930 . 179 88. Savings deposits before and since prohibition. . . . . 180 89. Life insurance issued and in force, 1910 to 1930 181 90. Assets of building and loan associations 182 91. Life insurance issued and in force, and assets of building and loan associations, before and since prohibition 183 92. P e r capita consumption of non-alcoholic beverages, 1890 to 1930 186 93. Per capita consumption of ice cream, confectionery and tobacco, and attendance at motion pictures, 1899 to 1929 • • 191 94. Indexes of productivity and of alcohol consumption, 1899 to 1927 198

TABLE

OF

CASES

15

TABLE

95. 96.

PAGE

I n d e x e s of accident frequency rates and of alcohol c o n s u m p tion, 1913 to 1930 Industrial a c c i d e n t death rates and the consumption of alcohol, 1912-1924.

97. 98. 99. 100. 101. 102. 103. 104. 105.

203

A b s e n t e e i s m in a D e l a w a r e powder plant A v e r a g e annual p e r c e n t a g e decline in absenteeism in a Delaw a r e p o w d e r plant R e s o u r c e s devoted to the production of alcoholic b e v e r a g e s , 1899 to 1 9 1 4 R e s o u r c e s seized by Federal prohibition a g e n t s , 1921 to 1930. D e a t h rates f r o m diseases associated with the use of a l c o h o l , 1900 to 1 9 3 0 A v e r a g e annual death rates from diseases associated w i t h the use of alcohol before and since the adoption of prohibition. H o s p i t a l i z a t i o n of alcoholic cases, 1912 to 1930 A v e r a g e annual rates of hospitalization of a l c o h o l cases before and since the adoption of prohibition D e a t h rates f r o m all causes and from tuberculosis, 1900 to

112.

1930 - • D e a t h rates, hours of labor, and the c o n s u m p t i o n of a l c o h o l . I n d e x e s of m o t o r - v e h i c l e fatalities and of alcohol c o n s u m p t i o n , 1913 t o 1929 A l c o h o l c o n s u m p t i o n and criminal activity, 1900 to 1929 . . A l c o h o l c o n s u m p t i o n and criminal a c t i v i t y : a v e r a g e annual rates for various periods E s t i m a t e d annual losses of farmers on account of reduced production of beer C h a n g e s in death rates f r o m diseases associated with the use of alcohol U r b a n and rural death rates from alcoholism and cirrhosis of

113.

F e d e r a l e x p e n d i t u r e s upon the e n f o r c e m e n t of

114. 115. 116.

1920 to 1930. Internal r e v e n u e tax rates on alcoholic b e v e r a g e s since 1862. G o v e r n m e n t revenue from alcoholic b e v e r a g e s , 1890 to 1919. E s t i m a t e s of loss of Federal g o v e r n m e n t revenue as a result

106. 107. 108. 109. no. in.

the liver, 1911-14 and

200

1926-28

of prohibition, 1920 to 1931

205 205 209

2T0 213

214 215 216 218 220 222 224 226 231 234 239

prohibition, 246 248 249 250

I N T R O D U C T I O N THE

E C O N O M I C A S P E C T S OF

PROHIBITION

AMONG the arguments offered f o r and against national prohibition of the manufacture and sale of alcoholic beverages are several which are primarily economic in character. In f a v o r of prohibition it is argued : ( i ) T h a t f o r some years a f t e r the adoption of prohibition there was a notable decline in the national expenditure f o r alcoholic beverages and that the money thus saved promoted prosperity by being spent f o r other things. ( 2 ) T h a t prohibition has resulted in g r e a t additions to deposits in savings accounts, in increased holdings of life insurance, in employee purchases of corporate stocks, and has thus increased the productive resources of the nation. ( 3 ) T h a t workingmen are more sober since the adoption of prohibition, and that this sobriety has been an important element in the increased efficiency of American industry in recent years. ( 4 ) T h a t reduction in industrial and motor accidents and improvement in public health, traceable to prohibition, have aided productivity. ( 5 ) That resources formerly devoted to the production of alcoholic beverages are now used in other industries which yield greater returns to their owners and to the communities in which they are located. ( 6 ) T h a t the economic arguments presented in opposition to prohibition are fallacious or relatively insignificant. 1 1

The literature on prohibition is voluminous, and it is not possible

to refer to more than a small part of the books, pamphlets and journals

17

i8

INTRODUCTION

In opposition to prohibition it is argued: ( i ) That the foregoing arguments in favor of prohiin which these arguments appear. are the following:

A m o n g the more important, however,

Thomas N i x o n Carver, " T h e Effects of Prohibition on O u r Economic Structure,"• The New York Times, February i, 1931, I X , p. 5. Ernest H . Cherrington, "Education and Prohibition," Congressional Record, October 8, 1929. Ernest H . Cherrington, " A Study of the Social E f f e c t of National Prohibition," Congressional Record, November 19, 1929. Ernest H . Cherrington, " W o r k i n g and Results of Prohibition in the United States," Congressional Record, A p r i l 3, 1930. Samuel Crowther, Prohibition and Prosperity ( N e w Y o r k , 1930). Herman Feldman, Prohibition: Its Economic and Industrial Aspects ( N e w Y o r k , 1927). Irving Fisher, Prohibition at Its Worst ( N e w Y o r k , 1927). Irving Fisher, Prohibition Still at Its Worst ( N e w Y o r k , 1928). Irving Fisher, The Noble Experiment ( N e w Y o r k , 1930). Paul H . Nystrom, Economic Principles 0} Consumption (New York, 1929). Board of Temperance, Prohibition and Public Morals of the Methodist Episcopal Church, Pamphlet No. 126, What Has Prohibition Done? Board of Temperance, Prohibition and Public Morals of the Methodist Episcopal Church, Pamphlet No. 160, Prohibition Prosperity. Board of Temperance, Prohibition and Public Morals of the Methodist Episcopal Church, Pamphlet No. 161, Why I Am for Prohibition. Board of Temperance, Prohibition and Public Morals of the Methodist Episcopal Church, pamphlet entitled The Facts About Prohibition —Illustrated—Trust Your Eye (Washington, 1927). Bureau of Prohibition, United States Department of Justice, The Value of Law Observance (Washington, 1930). U . S. Congress, Senate, Subcommittee of the Committee on the Judiciary, The National Prohibition Law (Washington, 1926). U. S. Congress, House, Committee on the Judiciary, The Prohibition Amendment (Washington, 1930). National Commission on L a w Observance and Enforcement, Report on the Enforcement of the Prohibition Laws of the United States (Washington, 1930). The Monitor Bureau, " F r o m V a c u u m Cleaners to Bathtubs People H a v e Bought More in D r y E r a , " The Christian Science Monitor, June 10, 1930.

INTRODUCTION bition

a r e either

fallacious

or

19

their i m p o r t a n c e

is

much

exaggerated. (2)

That

prohibition

has

fostered

crime,

and

conse-

quently increased the cost o f g o v e r n m e n t a n d l a w e n f o r c e ment. (3)

T h a t prohibition h a s resulted in a serious loss o f

public revenue. (4)

That

farmers,

certain

have

been

groups

of

seriously

producers, affected

by

especially the

the

loss

of

m a r k e t s f o r their products. (5)

T h a t alcoholic b e v e r a g e s , if used w i s e l y , contribute

to national

efficiency b y

p r o m o t i n g the r e l a x a t i o n

s a r y at the close of a d a y ' s (6)

That

economic

reduced

benefits

alcohol

may

be

achieved

more economically

national

prohibition.2

neces-

work. consumption, derived by

and

therefrom,

whatever can

some other method

be than

"The Debate on Prohibition: A Summing Up," The New York Times. March 30, 1930, I X , p. 3. Department of Research and Education, Federal Council of the Churches of Christ in America, Research Bulletin No. 5, The Prohibition Situation. 2

Many of these arguments are discussed in the references mentioned as containing arguments in favor of prohibition. Other sources are the following: Rheta Childe Dorr, Drink: Coercion or Control? (New York, 1929). Fabian Franklin, The A B C of Prohibition (New York, 1927). John C. Gebhart, "Prohibition: Statistical Studies of Enforcement and Social Effect," Statistics in Social Studies (Philadelphia, 1930). Reginald E. Hose, Prohibition or Controlf (New York, 1928). Ernest H. Starling, The Action of Alcohol on Man (New York, 1923). Millard E. Tydings, Before and After Prohibition (New York, 1930). The Hearst Temperance Contest Committee, Temperance—or Prohition? (New York, 1929). Association Against the Prohibition Amendment, Government Liquor Control in Canada (Washington, 1929).

20

INTRODUCTION

The following chapters are an analysis, largely statistical, of the available facts relevant to the foregoing arguments, both f o r and against prohibition. T h i s study is by no means a complete survey of the economic aspects of prohibition. It is especially deficient in its lack of a field survey, for field studies, if made by competent investigators, would have been invaluable in showing the regional distribution and variability of many phenomena which can be handled statistically only on a national basis. It is hoped, however, that, even without the support of a field survey, the analysis throws some light upon the much-discussed relation of prohibition to public welfare. Association A g a i n s t the Prohibition Amendment, Cost of Prohibition and Your Income Tax ( W a s h i n g t o n , 1929). Association A g a i n s t the Prohibition Amendment, Scandals of Prohibition Enforcement ( W a s h i n g t o n , 1929). Association A g a i n s t the Prohibition Amendment, Does Prohibition PayT ( W a s h i n g t o n , 1930).

PART THE

ONE

C O N S U M P T I O N OF

ALCOHOL

CHAPTER PRE-PROHIBITION

I

CONSUMPTION

OF

ALCOHOLIC

BEVERAGES

T H E validity of most of the economic a r g u m e n t s both f o r and against prohibition depends upon the extent to w h i c h prohibition has modified the consumption of holic beverages.

alco-

F o r this reason it is necessary, b e f o r e

e x a m i n i n g these arguments, to compare the quantities of such

beverages

used

before

and

since the

adoption

of

prohibition. In T a b l e i the per capita consumption o f spirits, w i n e and beer in the U n i t e d States, as reported b y the C o m missioner intervals to

1922.

of

Internal

Revenue,

f r o m 1840 to

is given,

for

1900, and by years

ten-year

from

T o this is added a computation o f

1900

the

total

alcohol consumed per capita, based on an a v e r a g e alcoholic content of 4.25 per cent by volume f o r beer and 14 per cent f o r wine.

T h e consumption of spirits is g i v e n in proof

gallons, containing 50 per cent alcohol by volume, or 42.47 per cent by weight. T h e above

figures

f o r spirits and f o r beer are based

upon the w i t h d r a w a l s f o r sale on which internal revenue taxes w e r e paid.

F o r wine they are computed f r o m the

estimated annual production and f o r e i g n trade. these figures is precisely accurate. some

m a n u f a c t u r e of

N o n e of

T h e r e has a l w a y s been

alcoholic spirits, especially

in the

southern Appalachian region, by persons e v a d i n g the F e d eral t a x , as well as some production of cider and wines

in

homes

Federal tax.

and

rural

areas,

which

also

paid

fruit no

It is probable, also, that the consumption of

wine varied less f r o m year to y e a r than did its production, 23

THE

ECONOMIC

RESULTS

OF

T A B L E PEH C A P I T A

CONSUMPTION o r UNITED

Year ending June 30 1840 I8SO i860 1870 1880 1890 1900 I90I 1902

Spirits (proof gallons) 2.52 2.23 2.86 2.07 1.27 1-39 1.28

Ii»3 1904 190S 1906 1907 1908

i-39 1.32 1.42 1.46

1915 1916 1917 1918 1919 1920 1921 1922 SOURCES

Wine (gallons) .29 •27 •34 •32 .56 .46

.85 •77 .26 •32

THE

1922

Beer (gallons) 1.36 I.S8 3-22

Total pure alcohol (gallons) 136 1.22 1.62

5-31 8.26

I.3I 1.06

13-57 16.06

1-34 1.38 1.38 1.49 1.53 I-SS i-53 1.64

15-95 17-15 17.64 17.88 17-99 19.51 20.53 20.23

•53 •33 •47 •41 •49 •51 .12

1-37 1.62

1-75 1.64

19-04 19-77 20.69 20.02 20.72 20.69 18.40

1.S6 1.64 1.70 1.66

17.78 18.17 14.87 8.00

i-Si 1.64

2-45

•25 .19 .10

1.71 1.67 1.46

113 .80

• 19 •09

• 17 OF

1 8 4 0 TO

.67 .65 .67 •58 •56

1-45 i-5i 1.44 1.26

1913 1914

STATES,

•47 •52 •41 •53 .65 .58

1-47 1.58

1909 I9IO 1911 1912

I

A L C O H O L I C BEVERAGES I N

•39 •36 .62

I.3I 1-34 1-43 1-44 1.41

PROHIBITION

DATA :

Spirits, wine and beer: Statistical Abstract of the United States, 1922, pp. 692-697. Total alcohol: computed from the preceding columns, assuming the average alcoholic content of beer to be 4.2s per cent, and of wine to be 14 per cent. and,

consequently,

less

than

is

indicated

in

the

table.

H o w e v e r , it is g e n e r a l l y r e c o g n i z e d t h a t t h e s e e r r o r s , f o r the

PRE-PROHIBITION

CONSUMPTION

25

years prior to 1 9 1 9 , are not large, and the per capita consumption recorded in this table, up to 1 9 1 9 , may be considered approximately correct. 1 The figures for 1920 to 1922, inclusive, represent withdrawals from bonded warehouses for medicinal, sacramental and scientific purposes. It may be noted that during the years from 1 9 1 1 to 1 9 1 4 the consumption of alcoholic liquors was relatively steady. The slightly lower figures for 1 9 1 5 and 1 9 1 6 are probably due partly to the extension of state-wide prohibition laws and partly to changed habits associated with the European war. 2 The unusually great per capita consumption of spirits in the year ending June 30, 1 9 1 7 , may have been due to a reaction against the comparative abstemiousness of the two preceding years, but more probably to the withdrawal of spirits in anticipation of increased taxation or of war-time restrictions. 3 During the year ending June 30, 1 9 1 8 , the production of alcoholic beverages was limited by the Food Control Act. In view of these facts, it is best to take the fiscal 1 In 1915, which appears to be a typical year, Federal officials seized 3,764 illicit stills, and 34,381 gallons of distilled spirits (U. S. Treasury Dept., Bureau of Industrial Alcohol, Statistics Concerning Intoxicating Liquors, December, 1930, p. 72). If this were one per cent of the amount of distilled spirits which escaped the tax, the consumption of spirits per capita given in the above table would be .03 gallons, or 2 per cent, too low. 2 During 1914 and 1915 ten states, Colorado, Virginia, Arizona, Oregon, Washington, Arkansas, Idaho, Iowa, Alabama and South Carolina, adopted prohibitory laws or constitutional amendments. These states in 1910 contained 14 per cent of the population of the United States. 3 From the middle of April, 1917, to the end of the fiscal year Congressional Committees were considering increases in the liquor taxes. An attempt was also made to introduce a prohibition clause in a bill dealing with German spies. Cf. Charles Merz, The Dry Decade (Garden City, N. Y., 1930), p. 26.

26

THE

ECONOMIC

RESULTS

OF

PROHIBITION

years 1911 to 1914 as the period of normal consumption of alcoholic beverages prior to prohibition, with which consumption in recent years may be compared. In Table 2, the average consumption of alcoholic beverages during the fiscal years 1911 to 1914 is compared with the consumption in other countries during approximately the same period. TABLE

2

A V E R A C E A N N U A L PER C A P I T A C O N S U M P T I O N OF ALCOHOLIC LIQUORS I N V A R I O U S COUNTRIES,

Country

Spirits (U. S. proof gallons) . . . . . . . . 1.47

United States United K i n g d o m Belgium Holland

.

.92 . ... . ...

I.49

France

.. . .

2.04

Italy Switzerland Germany

....

1.05 1.52

Denmark Sweden

•35 .... .... ....

Norway Canada

I.4I

....

1910-1914

Wine (gallons) •59 •31 I.II

•34 3749 33-79 1505 1.24

1.78

•37 • 15

89 148

.40 .16

2.84

Beer (gallons) 20-53 32.43 59-66 7-52 8.87

•57

Total pure alcohol (gallons) 1.69 I.96

3-29 I-os

5-12 3.58

21.12

2.88

27.46 22.76

2.38

1300 5.62 8.22

2.03

i.41 •73 1.11

SOURCES OF D A T A :

United States: T a b l e 1, supra, p. 24, average f o r 1911-1914. United K i n g d o m : The Alliance Year Book for 1931, p. 321. F i g u r e s converted from Imperial gallons to United States gallons and from British proof to United States proof. It is assumed that wine averages 14 per cent alcohol, and beer 4.5 per cent. Other European countries: Annuaire Statistique de la France, 192%, PP- 375. 376, 379- F o r beer and wine figures are f o r the years 19111913. A l l figures converted f r o m liters to United States gallons. It is assumed that beer averages 4 per cent alcohol; wine 10 per cent in France, Italy and Switzerland, and 14 per cent elsewhere. C a n a d a : " L i q u o r Traffic in Canada," Canadian Department of T r a d e and Commerce, and Canada Year Book, 1914, p. 558. F i g u r e s are f o r the years 1911-1914, and converted f r o m Imperial gallons to United States gallons, and from British proof to United States proof. It is assumed that wine averages 14 per cent alcohol, and beer 4.25 per cent.

CHAPTER THE

CONSUMPTION

OF

II

ALCOHOLIC

BEVERAGES

UNDER

P R O H I B I T I O N : E S T I M A T E BY S O U R C E S OF PRODUCTION

SINCE the adoption of prohibition estimates of the quantity of alcoholic beverages consumed in the United States can be made only indirectly. There are three feasible methods: from the materials used in producing alcoholic beverages; from sickness and death rates associated with the use of alcohol; and from police and court cases resulting from the use of liquor. 1 These three methods are completely independent of each other, and this chapter is devoted to the first of them. T H E CONSUMPTION OF BEER

With the exception of hops, the materials used in malt liquors are also used f o r other purposes to such an extent that it is not possible to estimate the quantity used in the production of beer. But hops are used only to a slight extent for purposes other than the manufacture of beverages, and, consequently, it is reasonable to assume that practically all the hops unaccounted f o r by the legitimate manufacture of cereal beverages and by exportation are used in the production of beer in American homes and in illegal breweries. The available statistics in regard to the use of hops in the United States since 1 9 1 6 are given in Table 3. 1

Were a field study to be made, it might also be possible to obtain estimates of the sale of alcoholic beverages in specific cities and regions from persons engaged in their production and sale, and to estimate the national consumption from these samples.

27

28

THE

ECONOMIC

RESULTS T A B L E

OF

PROHIBITION

3

U S E OF H O P S I N T H E U N I T E D

STATES

(thousands of pounds) Year ending June 30 1916

Production S2,986

Net exports 21,869

1917 1918 I9I9

50,595 29,388 2I,48t

4,664

I920 1921 1922

24,970 34,280

1923 1924

27,744 19,751 27,670

28,187 18,226 19,116 12,401

I92S 1926 1927 1928 1929

29,340

28,573 31,522 30,658

I930

32,944 33,220

1931

23,447

3,4" 7,472

19.832 15,737 14,592 12,936 11,087 8,172 5,867 4,570

Used by brewers 37,452 41,949 33,481 13,925 Used by beverage and spirit manufacturers 6,441 5,989 4,453 4,556 3,815 3.314 3,498 3,i5o 3,078 2,735 2,627 2,197

—6,335 3,982

Farm price Dec. 1, cents per lb. II .7 I2.0

—7,504 7,556

33-3 19-3

Balance

—9,658 10,065 5,771

10,787 -3,896 8,619 10,483 15,436 •6,493 22,037 24,726 16,680

Consumption unaccounted for (smoothed)

77-6 3,000 4,000 5,500 7,000 9,000 11,000 13,500 16,000 20,000 23,000 19,500

35-7 24.1 8.6 18.8 10.3 21.8 23.0 22.9 19-3 11.4 14.8

SOURCES OF D A T A :

Production, net exports, and farm price: 1916-1929, Yearbook of Agriculture, 1930, p. 812; 1930-1931, Crops and Markets, Dec. 1930, p. 481, and Monthly Summary of Foreign Commerce of the United States. Used by brewers, and used by beverage and spirit manufacturers : Statistics Concerning Intoxicating Liquors, December, 1931, pp. 59, 78 and 79. Balance : production minus net exports and quantities used by brewers and manufacturers. Consumption unaccounted for : obtained from the column headed "balance" by allowing for carryover, for miscellaneous uses, smoothing, and expressing the results in round numbers.

In the above table, the column headed " B a l a n c e " g i v e s the surplus each year, a f t e r a l l o w i n g f o r net exports and

CONSUMPTION

UNDER

PROHIBITION

29

for the quantities used by manufacturers of cereal beverages and distilled spirits. These figures cannot be used directly as an estimate of the quantity of hops used in the manufacture of beer, on account of the fluctuations in carryover from year to year. Unfortunately, estimates of carryover are available only for recent years, and even these refer to various dates in the year. However, it may be noted that in two of the last four pre-prohibition years the quantity of hops exported and used by brewers was greater than the production, and that this deficiency of supply was greater than the excess during the other two years. During the year 1 9 1 9 - 1 9 2 0 , the first full year of prohibition, there was also a deficiency and the price of hops in the fall of 1 9 1 9 reached the exceedingly high figure of 77.6 cents per pound. These facts indicate a definite shortage of supply, and it may, therefore, reasonably be assumed that the carryover at the end of the crop year 19x9-1920 was negligible. The exceedingly low price of 8.6 cents per pound in the fall of 1922, together with the fact that the quantity exported and used by legitimate beverage manufacturers during 1923-1924 exceeded production, indicates that the carryover from the 1922-1923 season was exceptionally large. Again, the fairly high price prevailing from 1926 to 1928, gives ground for belief that the carryover in the fall of 1927 was small, and this is corroborated by references in trade journals. 2 On March 1, 1928, stocks in the hands of growers and merchants on the Pacific Coast were estimated at four million pounds, and a year later at seven million pounds. On August 1, 1930, the Pacific Coast carryover was approximately six million pounds, and on July 1, 1 9 3 1 , four million pounds.3 2

See The Malt Age, May, 1928, p. 32.

s

Federal-State Marketing Service, Sacramento, Cal., " Market Infor-

30

THE ECONOMIC

RESULTS

OF

PROHIBITION

W h e n all of these facts are taken into consideration, and allowance made f o r the use of a small quantity of hops in medicine, it is possible to make, in round numbers, a smoothed estimate of the consumption of hops unaccounted for, year by year, since 1920.* T h i s is a reasonable estimate of the quantity of hops used in the production of beer. Between 1911 and 1918 the breweries in the United States used from .64 to .71 pounds of hops per barrel of beer. 8 W h e n the entire process of making beer is carried on at home, the use of hops is doubtless much greater than this, and it is probable that such was the case during the early years of prohibition. However, in recent years "home-brew" is made principally from hopflavored malt extract or f r o m " w o r t , " which is "embryo beer before the yeast is added." It is not likely that the manufacturers of malt extract and of " w o r t " use a greater ratio of hops to beer than the pre-war manufacturers of beer. It is, therefore, reasonable to assume that there is now used about three-fourths of a pound of hops per barrel of beer produced; that is, that forty-one gallons of beer are manufactured for each pound of hops used. In mation on Hops," M a r c h 20, 1929, p. 9 (dealer estimates averaged and converted from bales into pounds) ; and Grain, H a y and Feed M a r ket N e w s Service, S a n Francisco, Cal., the " H o p M a r k e t R e v i e w , " July 3, 1931, and A u g u s t 5, 1931. 4 P r o f e s s o r Irving Fisher agrees w i t h M r . H u g h F . F o x in estimating the quantity of hops used annually for other than brewing purposes at 250,000 pounds ( F i s h e r , The Noble Experiment, p. 2 6 1 ) . Both of these men assume that hops are used in the manufacture of yeast, but an official of the company believed to be the largest manufacturer of yeast in the United States says that his company does not do so (letter to the author). 5

Computed

f r o m statistics of

hops used and of

beer produced, as

given in the annual reports of the Commissioner of Internal Revenue of the United

States.

CONSUMPTION

UNDER

PROHIBITION

order to make allowance for wastage, however, this is reduced to forty gallons of beer per pound of hops in the following estimate of the production of beer in the United States.' T A B L E ESTIMATED

PRODUCTION

OF BEER

1922

3 4

1923 1924

S'A 7

1925 1926 1927

SOURCES

IN

THE

UNITED

STATES,

Estimate of beer produced (millions of gallons) I20 160

Estimate of hops used (millions of pounds)

Year ending June 30 I92I

4

440

1-47 1-97 246 3-13 376 4.64

1928 1929

i3'/i 16

54« 640

20

I930

23

800 920

7-57

1931

19K2

/80

6.33

OF

TO 1 9 3 I

Beer produced per capita (gallons) I.II

220 280 360

9 11

1921

5-33 6.58

DATA :

Hops used: Table 3, supra, p. 28. Beer produced: computed at 40 gallons of beer per pound of hops used.

I n o r d e r to obtain an estimate o f the total c o n s u m p t i o n o f beer in the U n i t e d States, there m u s t be a d d e d to the d o m e s t i c p r o d u c t i o n the beer s m u g g l e d into the nation and deducted

that

seized

by

prohibition

agents.

The

only

figures

a v a i l a b l e r e g a r d i n g s m u g g l e d l i q u o r are those o f

liquor

cleared

States. 7

It

is

for

export

sometimes

from

Canada

asserted

that

to the

the

United

quantity

of

0 T h e Bureau of Prohibition reduces this to 28 gallons of beer per pound of hops, on the testimony of retail dealers regarding the use of hops in home brew (Possible Production of Illegal Liquor in the United States for the fiscal year ending June 30, 1930). It is doubtful, however, whether much of the beer consumed in A m e r i c a n cities is brewed at home by methods involving the direct use of hops. 7

Since

prohibition

in

the

United

States

involved

no

change

in

THE

32

ECONOMIC

RESULTS TABLE

OF

PROHIBITION

S

E S T I M A T E D C O N S U M P T I O N OF BEER I N T H E U N I T E D STATES, 1921 TO 1931 Ualt liquor seized b j Federal officials (millions of g a l l o n s )

Beer consumed (millions of gallons ) IIS

Year ending June 30

Beer produced in the United States (millions of g a l l o n s )

1921

I20

0

0

5

1 9 22

160

I

4

157

1923

220

•4 1.6

3

5

218

Smuggled Beer (millions of g a l l o n s ) F r o m all countries From (rough Canada estimate)

1924

280

3-4

7

S

282

1925 1926

360

3-6

7

7

360

440

4-5

435

540

S-i

9 10

14

1927

6

544

1928

640

4-6

4

645

1929

800

4-9

9 10

3

807

I930

920

17

4

4

920

1931

780

4

S

779

SOURCES OF D A T A :

Beer produced in the United States: Table 4, supra, p. 31. Beer smuggled from Canada: Dominion Bureau of Statistics. Figgures are for fiscal years ending March 31, and have been converted from Imperial gallons to United States gallons. Beer smuggled from all countries: estimated at twice the quantity exported from Canada to the United States (see footnote 6, supra, P- 3 0 Malt liquors seized by Federal officials: Statistics Concerning Intoxicating Liquors, December, 1930, p. 73. Beer consumed: beer produced plus smuggled beer minus malt liquors seized.

liquor actually sent from Canada to the United States is much greater than that cleared for export; and, on the other hand, that part of the liquor cleared for export to the United States is bootlegged back into Canada to escape Canadian law, Canadian officials continued to issue clearance papers for cargoes of alcoholic beverages exported f r o m Canada to the United States, and these cargoes were presumably smuggled into the United States. There is no indication in the Canadian export statistics that liquor designed for smuggling into the United States was cleared for export to other countries.

CONSUMPTION

UNDER

33

PROHIBITION

taxation. There is no valid evidence regarding either of these assertions. W i t h no other data available, w e may use twice the quantity exported f r o m Canada to the United States as a rough estimate of the quantity smuggled into the United States f r o m all countries. 8 In Table 5 this estimate of smuggled beer is added, and the seizures of malt liquor by Federal officials subtracted, f r o m Both the estimates of beer produced in the United States. the quantity smuggled into the country and the quantity seized are relatively insignificant, and the resulting estimate of the consumption of beer in the United States does not differ appreciably f r o m the estimate of domestic production. In Table 6 the estimated consumption of illegal beer is given f o r calendar years. T A B L E ESTIMATED Calendar years

CONSUMPTION

6

OF I L L E G A L B E E R ,

Millions of gallons

1921

TO

I92I

136

1922

188

1.71

1923 1924

250

2.24

321

2.84

I92S

398

346

1926

490

4.21

1927

S95

503

1928 1929

726

6.0s

864

7.11

1930

850

6.90

S O U R C E OF D A T A :

T a b l e 5 , supra,

1930

Gallons per capita 1.26

p. 3 2 .

8 The Bureau of Prohibition estimated the total quantity of all alcoholic beverages smuggled into the United States during the fiscal year ending June 30, 1930, at 4,858,200 gallons, which may be compared with 2,620,190 gallons exported from Canada to the United States (Possible Production of Illegal Liquor in the United States for the fiscal year ending June 30, 1930, pp. 48 and 4 6 ) . This estimate of smuggled liquor appears reasonable, in the light of all available statistics regarding exports of alcoholic beverages to the United States, and to nearby countries from which smuggling into the United States is convenient.

THE

ECONOMIC

RESULTS

T H E CONSUMPTION

OF OF

PROHIBITION WINE

T w o methods may be used in estimating the probable quantity of wine produced in the United States in recent years: one by deducting grapes exported (in the f o r m of raisins) and those probably used for table purposes f r o m the total annual production, and the other by assuming that all wine grapes and fresh raisin grapes, and a small percentage of table grapes and raisins, are used in wine-making. T o use the first method w e must first estimate the quantity of grapes used f o r other than wine purposes in the United States. In Table 7 such an estimate is made for three pre-prohibition years, 1899, 1909 and 1917, the only years for which sufficient data are available to make even approximate estimates. It will be seen from this computation that the per capita use of grapes for other purposes than exports and the production of liquors increased from 1899 t o I 9 ° 9 a t th e rate of .4 of a pound per year, and f r o m 1909 to 1 9 1 7 at the rate of .5 of a pound per year. It may be suggested that there has been an unusually rapid increase in the use of grapes for table purposes and of raisins in food in recent years as a result of advertising. This argument, however, must be offset against others: the fact that grapes have now to compete for table use with a greater variety of fruits than in former years, and the fact that the greatest increase in the consumption of raisins, which have been more widely advertised than any other form of grapes, occurred before 1917." It appears 9 F r o m 1910 to 1914 the per capita consumption of raisins was approximately i l /i pounds per year. B y 1917 it had increased to 2 } i pounds, remaining approximately at that level until 1924, when it increased to about 3'/2 pounds per capita. (Shear, Economic Status of the Grape Industry, p. 124). Extensive advertising of raisins began in 1914.

CONSUMPTION

UNDER

PROHIBITION

35

TABLE 7 PRODUCTION

AND U S E

OF G R A P E S

1899, 1909

AND

IN T H E U N I T E D

STATES,

1917 1899

Production of grapes in California, tons 392,000 Production of grapes outside California, tons 290,000 Production of vinous liquors in California, gallons 5,492,000 Production of vinous liquors outside California, gallons 2,754,000 Ratio of production of vinous liquors outside California to that in California 50.1% Grapes used for wine and brandy in California, tons 236,000 Grapes used for wine and brandy outside California, estimated 118,000 Grapes and raisins exported, tons of fresh grapes 8,000 Total grapes used for liquors and exported 362,000 Grapes available for other purposes, tons 320,000 Grapes available for other purposes, pounds per capita 8.6

1909

858,000 296,000

1917

1,254,000 192,000

16,006,000 2,630,000

16.4% 490,000

441,000

80,000

64,000

18,000

96,000

588,000

601,000

566,000

845,000

12.5

16.5

SOURCES OF D A T A :

Production of grapes in California: S. \V. Shear, Economic Status of the Grape Industry, Bulletin 429, University of California, College of Agriculture Agricultural Experiment Station, June, 1927. Production of grapes outside California: 1899, United States Census of Agriculture, 1910, p. 7 1 6 ; 1909 and 1917, Shear, op. cit., p. 24. Production of vinous liquors: U. S. Census, 1910, v. 5, p. 717. Grapes used for wine and brandy in California: Shear, op. cit., p. m . Grapes used for wine and brandy outside California : 1899 and 1909, computed by applying the ratio of production of vinous liquors outside California to that in California; 1917, computed by assuming that onethird of the crop outside California was used for wine, Standard Encyclopedia of the Alcohol Problem, (Westerville, Ohio, 1925) v. 3, P- II35.

36

THE ECONOMIC RESULTS

OF

PROHIBITION

Grapes and raisins exported: 1899, Statistical Abstract of the United States, 1906, p. 3 3 9 ; 1909 and 1917, Shear op. cit., p. 124. Raisins converted to fresh fruit on the basis of 3^2 pounds of fresh fruit per pound of raisins (letter from the Sun-Maid Raisin Growers of California). Total grapes used for liquors and exported: total of the preceding three items. Grapes available for other purposes: total production minus grapes used for liquors and exported.

reasonable, therefore, to estimate the m a x i m u m increase in per capita consumption f o r other purposes at one-half pound per year since 1 9 1 7 . M a k i n g this allowance, and allowing f o r grapes exported and f o r grapes used in the officially reported production of wine and spirits, the production of illicit and home-made wine in the United States m a y be estimated. T h i s method necessitates the assumption that when the grape crop is short, as in 1 9 2 1 and in 1 9 2 4 , there is no reduction in the use of grapes f o r table purposes, but that the entire shortage is met by a reduction in grapes used f o r wine purposes; and the assumption that when the g r a p e crop is large, as in 1 9 2 3 , the surplus all goes into the increased use of wine. These assumptions are not strictly accurate and the estimates in the following table of illicit and home-made wine are, therefore, probably too high in some years and too low in others. It is quite possible, also, that the line of trend in the use of grapes f o r table purposes has tended to flatten cut, instead of increasing u n i f o r m l y at the rate of one-half pound per year. If so, the estimate of wine produced given in Table 8 is too low f o r the more recent years. T h e B u r e a u of Prohibition states that investigators in various departments of the United States Government agree that all of the wine grapes and fresh raisin grapes are used in making w i n e ; and estimates that about 1 0 per cent of the table grapes and raisins produced are also used

CONSUMPTION

UNDER T A B L E

ESTIMATED

PRODUCTION

OF W I N E

PROHIBITION

37

8

IN T H E UNITED STATES,

1921

TO

1931

( F i r s t method) Exports Production and used Used for otlier for legal of purposes grapes wine Pounds per (1000 tons) (1000 tons) and spirits capita 190 18 958 1,523 18 J/2 1,212 139 997

Year ending June 30 I92I I922

1923

1,981

290

19

1,037

1924

2,227

226

1 9 "/i

1,089

I925

1,778

264

1926

2,064

286

1927

324 419

I930

2,423 2,463 2,518 2,022

1931

2,245

1928 I929

SOURCES

OF

20

i,i37

Illicit and Balance home-made available vine for homeproduced made wine (million (1000 tons) gallons) 375 76

56 11

654 912

137

98

20l/2

1,183

377 595

89

57

21

1,230

869

130

1,275

769

H5

484

21/2 22

1,320

107

269

22^2

1,383

714 370

250

23

1,426

569

85

56

DATA :

Production of grapes : S h e a r , op. cit., p. 24, Yearbook of Agriculture, 1930, p. 7 3 1 , and Crops and Markets, December, 1930, p. 481. Grapes produced in C a l i f o r n i a but not harvested have been deducted. E x p o r t s and used f o r legal wine and spirits : computed by totalling ( a ) domestic exports of grapes (Yearbook of Agriculture, 1930, p. 7 3 1 , and issues of the Monthly Summary of Foreign Commerce of the United States), ( b ) domestic exports of raisins ( S h e a r , op. cit., p. 124, and issues of the Monthly Summary of Foreign Commerce of the United States) multiplied by z l A to convert to fresh fruit, ( c ) grapes used f o r legitimate wine production, at 1 5 0 gallons of wine per ton (Statistics Concerning Intoxicating Liquors, December, 1930, p. 57, and December, 1 9 3 1 , p. 6 1 ) , and ( d ) grapes used in the legitimate production of spirits ( S t a t i s t i c s Concerning Intoxicating Liquors, December, 63). Used f o r other

1 9 3 0 , P-

purposes,

pound per y e a r after Balance available :

pounds

per capita :

increase

of

one-half

1917. production minus exports and used for wine and

spirits and minus used f o r other

purposes.

Illicit and home-made wine produced: computed at the rate of gallons of wine per ton of grapes. Fisher, The

Noble

Experiment,

150

S e e S h e a r , op. cit., p. i n , and I r v i n g

p. 273.

F i s h e r gives the yield as f r o m

to 2 gallons of wine per b o x of 25 or 26 pounds of grapes, which is the equivalent of f r o m 140 to 160 gallons per ton.

38

THE

ECONOMIC

f o r this purpose.

RESULTS

OF

PROHIBITION

T h e s e a s s u m p t i o n s a r e u s e d a s the b a s i s

of the e s t i m a t e s in T a b l e 9. TABLE 9 E s t i m a t e d Production of W i n e in t h e United S t a t e s , 1921 to 1931 (Second method)

Year ending June 30 I92I 1922 1923 1924 1925 1926 I927 1928 1929 1930 1931

Fresh raisin and wine grapes produced in California (1000 tons) 375 310 450 558 530

Raisins and table grapes produced in California (1000 tons) 874 743 1,161

Grapes produced in other staxes (1000 tons) 250 112

773 643 776

1,139 1,471 1,488

275 197 243 152 309 199

844 654 981

1,369 1,097 986

305 271 278

1.472 1,005

Grapes used for making wine (1000 tons) 487 396 594 725 655 922 821 945 I.Ol I 791 1.108

Produced Total by wine licensed produced wineries (millions (millions of of gallons) gallons) 21 73 6 59 89 109 98 138 I-'3 142 152 119 166

15 9 4 6 4 5 11 3 7

Illegal and home-m wine (millio of gallon 52 53 74 100 94 132 119 137 141 116 159

Sources of D a t a : Production of grapes, all three classes: Vearbook of 1927, p. 848; 1930, pp. 731-732, and Crops and Markets, 1930, p. 481. Raisins converted to f r e s h grape basis.

Agriculture, December,

Grapes used f o r making w i n e : 100 per cent of the wine and fresh raisin grapes produced in California, plus 10 per cent of the table grapes and raisins on fresh grape basis produced in California, plus ten per ccnt of the total production in other states. Total wine produced: computed f r o m grapes available f o r wine at the rate of 150 gallons per ton of grapes. T h e estimates in this column differ slightly from the estimates of the Bureau of Prohibition (Possible Production of Illegal Liquor in the United States for the fiscal year ending June 30, 1930), inasmuch as the B u r e a u failed to deduct in some years the quantities of grapes produced but not harvested in California, while in this table no allowance has been made f o r the small quantities of grapes exported and imported. Produced by licensed wineries: Statistics Concerning Liquors, December, 1930, p. 57 and December, 1 9 3 1 , p. Gi.

Intoxicating

Illegal and homemade wine produced: total wine produced less that produced by licensed wineries.

CONSUMPTION

UNDER

PROHIBITION

It will be noted that the estimated production of illegal and home-made wine as computed by this method is greater in most years than as computed by the first method. Since this method is at least as reasonable as the first, an average of the two estimates may be considered a conservative estimate of the production of illegal and home-made wine during the years since the adoption of prohibition. T o obtain an estimate of wine consumption, there should be added to the estimate of production the wine smuggled into the country, that withdrawn f o r medicinal and sacramental use, and that made f r o m other fruits than grapes. There should be deducted the wine seized by prohibition agents. Smuggled wine is insignificant. T h e largest quantity cleared f o r export f r o m Canada to the United States in any year since 1 9 2 0 is about one-fourth of a million gallons, and if we assume an equal quantity to be smuggled in f r o m other countries, the total is not more than half a million gallons. 1 0 It is impossible to make any estimate of the quantity of wine made f r o m any other fruits. T h e Bureau of Prohibition does not report the quantity of wine seized separately, but combines it with cider, mash and pomace. N o estimate can, therefore, be made of the quantity of wine seized by prohibition agents. S o the following estimate of consumption differs from the estimate of production of grape wine only by the addition of wine legally withdrawn f r o m bonded wineries. In view of the convenience of computing the estimates of consumption of spirits by calendar instead of fiscal years, this estimate of the consumption of wine, like that of beer, is converted to calendar years. T h i s has the added advantage of reducing the overestimate of production in years of a large crop and the underestimate in years of a small crop. 10 Cf. footnote 6, supra, p. 31. Figures of Canadian exports to the United States furnished by the Dominion Bureau of Statistics.

THE

4°

ECONOMIC

RESULTS

OF

PROHIBITION

T A B L E io ESTIMATED

Year ending June 30 I92I 1922 1923 1924 I92S 1926 1927 1928 1929 1930 I93I S O U R C E S OF

CONSUMPTION

Illegal Removed and from bonded home-made wineries. tax-paid wine (millions (millions of gallons) of gallons) 6 54 32 86 118 76 in 125 126 124 86 122

3 4 4 5 5 2 2

OF W I N E ,

1921

1931

Wine Consumed Millions Gallons per of gallons capita

Calendar year I92I 1922 I923 1924

48 63 I06 102

1925 1926 1927 1928 1929

3 3 2

TO

99 122 128 128 108 107

1930

•44 •57 •9S .90 .86 i 05 1.08 1.07 .89 .87

DATA:

Illegal and home-made w i n e : average of estimates in Table 8, supra, p. 37, and Table 9, supra, p. 38. Removed from bonded wineries, tax paid: Statistics Concerning Intoxicating Liquors, December, 1931, p. 75. Wine consumed, calendar y e a r s : averages of figures for successive fiscal years. F o r example, the illegal and home-made wine produced in the United States plus that removed from bonded wineries was 60 million gallons for the fiscal year ending June 30, 1921, and 35 million gallons for the fiscal year ending June 30, 1922. The average for these two fiscal years is 48 million gallons, and this is used as the estimate of consumption during the calendar year 1921. T H E C O N S U M P T I O N OF SPIRITS

It is more difficult to m a k e an estimate f r o m sources of production of the consumption of spirits than of beer or o f wine.

T h e r e is no one material which can be selected

because o f its especial use in the m a n u f a c t u r e of distilled liquors.

Account

must

be

taken

of

several

possible

sources of distilled spirits f o r beverage purposes, and o f the probable quantity obtained f r o m each of these sources. Industrial

Alcohol.

It is popularly supposed that there

CONSUMPTION

UNDER

PROHIBITION

41

is a vast quantity of industrial alcohol diverted to the beverage industry, but the estimates which have been made, even by government officials, v a r y widely. 1 1 T h e r e are three forms of industrial alcohol which must be considered: pure alcohol released on payment of tax, completely denatured alcohol and specially denatured alcohol. 1 2 U p to 1 9 1 5 the volume of pure alcohol released on payment of tax was f a r greater than the production of denatured alcohol, though there had been a steady growth in the use of denatured alcohol a f t e r 1907. In 1 9 1 6 the production of specially denatured alcohol increased immensely, due to the w a r demand. A f t e r the increase in the tax rate on spirits in 1 9 1 7 , the withdrawals of pure alcohol decreased sharply; but on account of the w a r demand f o r denatured alcohol, it is impossible to tell whether this is due to the substitution of denatured alcohol, or simply to a decrease in the demand f o r the products f o r which the pure alcohol had been used. During the first f e w years of prohibition the withdrawals of pure alcohol decreased still further, due, presumably, though not certainly, to the substitution of denatured alcohol. In pre-war days large quantities of pure alcohol were used in patent medicines, many of which contained large 11 See, for example, the statements of Emory R. Buckner, United States Attorney for the Southern District of New York, and of J . M. Doran, at that time chemist in the Bureau of Internal Revenue, U. S. Congress, Senate, Subcommittee of the Committee on the Judiciary, The National Prohibition Lata, pp. 1309 and 1656. Mr. Buckner estimated a diversion of 60 million gallons, and Mr. Doran of between 13 and 14 million gallons, both in 1925. The latter estimate is much the more reliable. 12 The Bureau of Industrial Alcohol classifies the various formulas used for denaturing alcohol into two groups: completely denatured alcohol and specially denatured alcohol. (Statistics Concerning Intoxicating Liquors, December, 1931, pp. 26-32.)

42

THE

ECONOMIC

RESULTS

OF

PROHIBITIOX

percentages of alcohol, and doubtless considerable quantities were also used in f o r t i f y i n g beverages. It is thus absolutely impossible to estimate the quantity of alcohol, pure or denatured, formerly used f o r those purposes which are today considered industrial. In the f o l l o w i n g table it is assumed that the decline in the use of pure alcohol f o r proprietary medicines and f o r f o r t i f y i n g beverages is approximately offset by the increased use of specially denatured alcohol f o r various purposes in industry, which is known to have been very great in recent years. T h a t is, the per-capita use of all three classes of industrial alcohol f o r all purposes, except as anti-freeze in automobiles and in the lacquer industry, f o r which it is possible to make separate estimates, is assumed to have remained at .4 of a gallon, the average f r o m 1 9 0 7 to 1 9 1 5 . When allowance is made f o r annual fluctuations f r o m the estimated normal it is apparent that legitimate demands f o r alcohol account f o r nearly all the withdrawals of industrial alcohol, and there is no evidence f r o m this analysis of substantial diversion to beverage use. The years when diversion was most likely were 1 9 2 4 - 1 9 2 5 and 1 9 2 5 - 1 9 2 6 , when the large "balance" indicates that it may have been f r o m ten to fifteen million gallons annually. On the other hand, the character of the assumptions involved in the estimate of normal industrial demand precludes the definite conclusion that there has been no significant quantity diverted. Another, and probably more reliable, method of estimating the quantity of industrial alcohol diverted to beverage use is that of considering each formula f o r industrial alcohol and the probable diversion therefrom. M r . Doran, now Commissioner of Industrial Alcohol, estimates by this method that between thirteen and four-

CONSUMPTION

UNDER TABLE

PROHIBITION II

T H E USE OF INDUSTRIAL ALCOHOL IN THE UNITED STATES, 1907 TO 1931 ( M i l l i o n s of wine gallons, 190 p r o o f ) Year ending June 30 1907 1908

Pure 37-6

Alcohol withdrawn Completely Specially denadenatured tured 1-4 1.8

•4

39-4 35-0

343 35.0

2-4

30.4

35-6

35-6

—5-2

3-1

3-0

36.3

36.3

—1.0

3-5

35-3 36.1

36.9

36.9

—0.8

3-9 4-6

37-9 41.0

37-5 38.0

37-5 38.O

3-0

I9TO 1911

29.2

1912

29.8

3-4 4.2

1913 I0I4

31-2

5-2

30.9 28.3

5-4

1915 1916

30.9

191/ 1918

37-4

1919

9-5 11.9

1920 1921

15-4

Balance

i-5 2.2

31-7 25.8 29.2

1909

Total

Estimated normal legitimate use For mis- For In lacquer cellane- auto industry ous pur- anti- (calendar poses freeze years) Total

5-2 8.6

5*2

38.6

38.6

2.7

39-2

3-1

40.3 40.9

•7 2.0

39-7 41.0

37-9 52.1 22.6

41.4

4-9

40.7

42.0

6.3 9.0

38.8 45-2

93-1

10.3 10.0

39-8

650 47.8

I3S 12.4

15-3 10.0

39-7

134 8.6

16.2

17.2

35-8 42.0

42.6

1922 i9-'3 1924

5-7

27.1

30.4

63.2

43-7

11.9 18.2

4-9

34-6

72.6

44-7

24.6

1925 1926

4-5 4.6

47.0

33-i 34-8

45-5 46.2

28.9

39-5

86.3 110.0

1927

4-3 4.6

39-4

99.8

46.9

1928

47-0

45-5 54-6

97-1 111.6

47-5 48.0

47.6

IIO.O

37-2

90.2

1929

4-7

S2.4

1930

4-3

1931

3-9

58.1 49.1

0.4

39-2

7-9 10.5

65.9 56.1

S-I 0.0

41.3 42.3 77.6

28.3

34-3 35-0

43-1

42.9 46.3 i-4

49-7

i-3

52.9 — 1 7 . 1

i-3

56.3 — 1 4 - 3 64.2 — 1 . 0

2.3

44.1 43-8

i-5 —9.0

2-5 4.0

71.8

0.8

78.4

6.8

97.1 100.2

7-9 12.9

44-4

95 14.0

48.6

48.5 51.2

15-7 11.0

49-3

53-0

8.0

0.4 —8.8

105.9 112.2

—0.6

110.8

—0.8

110.3 —20.1

SOURCES OF DATA : Alcohol withdrawn:

Statistics

Concerning

Intoxicating

Liquors,

cember, 1930, pp. 4 and 27, and December, 1931, pp. 18-19.

De-

F i g u r e s for

pure alcohol converted f r o m t a x or proof gallons to g a l l o n s of 190 proof, by d i v i d i n g by 1.9. Estimated

normal

use

f o r miscellaneous

purposes:

computed

at

.4

of a gallon per capita, the a v e r a g e f r o m 1907 t o 1915. Estimated use f o r auto a n t i - f r e e z e : see f o o t n o t e Estimated use in lacquer i n d u s t r y : de N e m o u r s & C o m p a n y

13.13

f u r n i s h e d b y the E . I. du

f o r the y e a r s f r o m 1920 to

1931 estimated f r o m automobile production.

1930;

figure

Pont for

44

THE

ECONOMIC

RESULTS

OF

PROHIBITION

B a l a n c e : difference between total alcohol withdrawn and total estimated normal legitimate use. l s Previous to 1917 f e w cars were used during the winter. Closed car production w a s in 1917 about 4 per cent of the total, but had risen to more than 50 per cent in 1925. In computing the estimate of alcohol used as anti-freeze, it is assumed that its use g r e w gradually from 1917 t o 1925, reaching t w o gallons per car per winter of normal weather in 1925-26, and remaining at that figure since then.

It is assumed that little or no use in parts of the United States is offset by the use of more than t w o gallons per car in other parts. T h i s rate of use is then modified by an index of weather severity obtained by a v e r a g i n g the number of months with a minimum temperature below 32 degrees Fahrenheit in 69 cities ( d a t a f r o m A n n u a l and Monthly Reports of the W e a t h e r B u r e a u ) , the ten-year average f r o m 1919-20 to 1928-29 being taken as unity. T h e data and computations are shown in the following table. T A B L E ESTIMATE

Year 1916-17 1917-18 1918-19

OF

Number of automobiles registered December 31 (thousands) 3,513 4.983 6,147

1919-20 I920-2I

7.565 9,232

1921-22 1922-23

10,465 12,240

I9-23-24 1924-25

15,092

1925-26 1926-27 1927-28 1928-29

ALCOHOL

17,595 19,954 22,001

1929-30

23,133 24,493 26,501

1930-31

26,524

12

USED

FOR

Estimate of alcohol used per car Average in a winter number of of average freezing temperature months in (gallons) 69 cities 0.2 0.4 0.6 0.8 1.0 1.2 1-4 1.6 1.8 2.0 2.0 2.0 2.0 2.0 2.0

ANTI-FREEZE

Index of weather severity

Total alcohol used (millions of gallons)

7 2.0 4-9

5-74 5-32

1.041

5-03 6.09

•965 •951 I.064 1.020 .912 1.104

5-49

.996

5-29 5-45 5-33

•959 .988 .966

5-5'

•999

5-25 5.87 5.62

6-3 9.0 11 -9 18.2 24.6 28.9 44.1 43-8 444 48.5 51-2 53-0

T h i s estimate may be compared with an estimate made by a more detailed method by the Prohibition Unit, Bureau of Internal Revenue, f o r the calendar year, 1925, of 36.5 million gallons ( U . S. Congress, Senate, Subcommittee of the Committee on the Judiciary, The National Prohibition Law, p. 1315).

CONSUMPTION

UNDER

PROHIBITION

teen m i l l i o n g a l l o n s w e r e d i v e r t e d in 1 9 2 5 . 1 4

45

The

Bureau

o f P r o h i b i t i o n , u s i n g the s a m e m e t h o d , e s t i m a t e s a d i v e r sion

of

five

million

gallons

in

1929-1930,

a

total

with

w h i c h M r . D o r a n is in s u b s t a n t i a l a g r e e m e n t , d e s p i t e his dissent

from

the

Bureau's

certain

kinds

of

denatured

may

estimate

of

diversion

alcohol.15

These

be a c c e p t e d , w i t h o n e m i n o r c h a n g e

Bureau of those y e a r s .

from

estimates

in t h a t o f

the

P r o h i b i t i o n , a s the b e s t t h a t c a n be m a d e

for

M r . D o r a n estimated that perhaps a million

gallons of completely denatured alcohol N o .

5, u s e d

prin-

cipally f o r a u t o m o b i l e a n t i - f r e e z e p r e p a r a t i o n s , w a s d i v e r t e d to b e v e r a g e use

in

1925, but the

Bureau

of

o m i t t e d this f o r m u l a f r o m its c a l c u l a t i o n s .

Prohibition Deaths

from

w o o d alcohol p o i s o n i n g h a v e been n e a r l y a s g r e a t i n recent y e a r s a s in 1 9 2 5 , a n d it is s a i d , t o o , t h a t m a n y

hardened

d r i n k e r s a r e able to c o n s u m e a l c o h o l d e n a t u r e d w i t h a l d e hol a n d 4 per cent w o o d formula,

without

alcohol,

poisoning.18

the d e n a t u r a n t

Some

in this

allowance

ought,

t h e r e f o r e , t o be m a d e f o r d i v e r s i o n f r o m this f o r m u l a . F o r o t h e r y e a r s since 1 9 2 1

it is p o s s i b l e t o

f r o m these t w o e s t i m a t e s , w i t h clue r e g a r d

interpolate

f o r the

p r o d u c t i o n o f each k i n d o f d e n a t u r e d a l c o h o l .

total

T h i s is the

basis o f T a b l e 13. 11

of

Statement of J. M . Doran, U . S. Congress, Senate, the Committee

on the Judiciary,

The

National

Subcommittee

Prohibition

Law,

pp. 1309-1315. 1 5 Bureau of Prohibition, Possible Production of Illegal Liquor in the United States for the fiscal year ending June so, 1930, p. 32. Mr. Doran disagreed with the B u r e a u of Prohibition regarding diversion of alcohol from the perfumery and toilet w a t e r trade, terming this figure excessive ( T h e Atlanta Journal, October 12, 1930, p. 1 7 ) . In July, 1930, however, he estimated that diversion had been reduced t o less than S per cent of the total supply (New York Times, July g, 1930, p. 1 ) . F i v e per cent of the w i t h d r a w a l s of denatured alcohol would be 554 million gallons in 1929-30. 10

The New

York

Times,

A p r i l 29, 1931, p. 27.

46

THE ECONOMIC

RESULTS

OF

TABLE ESTIMATED

DIVERSION

PROHIBITION

13

OF INDUSTRIAL

1921

ALCOHOL,

to

1931

(millions of g a l l o n s ) Year ending /tine 30

Completely d e n a t u r e d alcohol No. 4 No. 5 No 6 Estimated Estimated Estimated WithdiverWithdiverWithdiverdrawn sion drawn sion sion drawn

P u r e alcohol Withdrawn

[921

Estimated diversion

6-5 9.8

2 I

5-8

I

5-7

4 i

18.8

I

6.9

2

4-9

54

25.8

I

7-2

3

36.1

I

8.7

47-9 47.0

I

12.4

4 8

I

•3

40.4

I I

13-4 8.6

1922 1923 1924 I92S 1926

4-5

1927

4-3 4.6

•3

5

46

1928

i-5

*'A

1929

4-7

41.6

1930

4-6

47-2

I

1931

3-9

41-5

I

S-I

Specially d e n a t u r e d alcohol Year ending June 30

No. 2-B Estimated W i t h - diverdrawn sion

No. 4 Estimated W i t h - diverdrawn sion

Nos. 36, 39-A No. 44-A 39-B, 39-C, 40 Estimated Estimated W i t h - diverW i t h - diverdrawn sion drawn sion

Total diversion

1921

2.0

.7

.1

1922

2-5

.9

3-2

I

7

1923 1924

4-7

.7

10.4

6

10

5-2

.8

12.1

7

11 Vi

1925 1926

6.7

1.0

12.8

8

13

9-i

2

12.2

VA

19

1927

11-3

3

1.7 1.4

1928

12.1

3

1929

13-9

1930 1931

^

7

6.9

3

'•3

6.8

3

.2

3/2

1.3

6.8

3

3-2

3

ioyi

13-3

2

1.3

5-5

2

I.I

I

6

8.9

I

1.3

34

I

.1

8J-Í 7

3

SOURCES OF D A T A : Alcohol withdrawn: cember,

1 9 3 1 , pp.

Statistics

Concerning

Intoxicating

E s t i m a t e d diversion, p u r e alcohol.

Not

De-

M r . D o r a n estimated the d i v e r s i o n

in 1 9 2 5 as negligible, but stated that in 1 9 2 1 experienced

Liquors,

18-25.

in the r e a d y

conversion

all the d i f f e r e n c e between

the

a n d 1 9 2 2 difficulties w e r e

of

p u r e alcohol

1921

production

t o illegal and

that

liquor. of

y e a r s is to be considered diverted, h o w e v e r , since the toilet g o o d s , perhaps other

industries,

used p u r e

alcohol

at that

time.

later and

CONSUMPTION

UNDER

PROHIBITION

47

Estimated diversion, completely denatured No. 4. This formula was produced only in small quantities previous to 1927, and discontinued thereafter. Most of the 1926-27 production was probably diverted. Estimated diversion, completely denatured No. 5. Mr. Doran estimated a million gallons a year diversion as a maximum in 1925. The number of deaths from wood alcohol poisoning has remained fairly constant during the whole period, except for 1921, and diversion in other years than 1925 has been estimated accordingly. This is the formula used principally for automobile anti-freeze preparations. Estimated diversion, completely denatured No. 6. Mr. Doran estimated no substantial diversion in 1921, and 4 million gallons in 1925. The formula was discontinued early in 1926. Estimated diversion, specially denatured No. 2-B. This is the formula chiefly used in making ethyl acetate, and it is estimated that about a third of the alcohol produced under this formula is used in its production. T h e Bureau of Prohibition estimates that in 1929-30 about half the acetate produced was "cracked" and the alcohol (about 2 million gallons) recovered. Mr. Doran thought none was diverted in 1925. Estimated diversion, specially denatured No. 4. This formula is used chiefly in tobacco manufacture and production in recent years has not been excessive. However, Mr. Doran estimated that about a half million gallons were diverted in 1925. Estimated diversion, specially denatured Nos. 36, 39-A, 39-B, 39-C and 40. These formulas cover the fields of perfumes, hair tonics and other toilet preparations. Mr. Doran estimated a diversion of 8 million gallons in 1925 and the Bureau of Prohibition of 2 million gallons in 1929-30. Estimated diversion, specially denatured No. 44-A. This formula was authorized for lacquer thinners and solvents, but the Bureau of Prohibition estimates that in 1929-30 most of the production was diverted.

I t m a y be well to examine, also, f o r m u l a s not included in the above estimates.

A c c o r d i n g l y , there are g i v e n in-

T a b l e 1 4 the quantities w i t h d r a w n of all other f o r m u l a s in which the w i t h d r a w a l s have in any y e a r since amounted to as much as a million gallons.

1921

48

THE

ECONOMIC

RESULTS TABLE

OF

PROHIBITION

14

INDUSTRIAL ALCOHOL WITHDRAWN, 1921 TO 1931

Important Formulas not Included in Table 13 (millions of gallons) Year ending June 30 I92I 1922 1923 I924 1925 1926 I927 1928 I929 >930 I93I

Completely denatured No. 1 No. 1 4.0 .2 •4

S-O 7.2

•S I.I

7.1 7-2

4-5 5-3 97

7-5 7-6 7-8 9.0

9-9 7-6

74 7-6

7-5

Specially denatured No. 3-A No. 13-A No. 18 No. 23-A No. 32 .2 1.0 .1 •7 1.8 1.0 •5 •5 •7 .8 •7 1.1 •9 •7 .8 •7 .6

2.3

.8

-5

i-9 1-3 1-4 1.6

i-7 13

•5 •5 1.1

1-4 1.6 1-4 1.2

1-7 3-6 7-3 8.3 8.1 6.1

1-5 2.3 4-1 3-4 3 2

•3 .8 I.I 1.2 I 2 I.I I.I •4

SOURCE OF DATA :

Statistics

Concerning

Intoxicating

Liquors,

December, 1931, p. 22-25.

Examination of these formulas and their uses does not reveal any likelihood of substantial diversion. Completely denatured No. 1 is used f o r a wide variety of purposes, and contains more wood alcohol than any other formula. Specially denatured No. 1 and No. 2 3 - A are used in the manufacture of many chemicals, and especially in lacquers, which accounts f o r the marked increase in withdrawals in recent years. No. 3 - A is also used f o r a wide variety of purposes. Nos. 1 3 - A and 3 2 are used in various medical and food preparations. No. 1 8 is used in the production of vinegar and acetone, the latter being used in the production of rayon and accounting f o r large withdrawals in recent years. T o estimate the beverage spirits, proof strength, produced f r o m diverted industrial alcohol, the estimates of total diversion may be multiplied by 1.9 and converted to calendar years. This is done in Table 1 5 .

CONSUMPTION

UNDER T A B L E

PROHIBITION IS

E S T I M A T E OF BEVEKAGE SPIRITS DIVERTED INDUSTRIAL

PRODUCED FROM

ALCOHOL

YEAR ENDING JUNE 30

ESTIMATED DIVERSION (MILLIONS OF GALLONS 190 PROOF)

BEVERAGE SPIRITS PRODUCED (MILLIONS OF PROOF GALLONS)

CALENDAR YEAR

1921

7

1921

1922

7

1922

16

1923

10

1923 1924

20

13

19^5

Ul/2 13

192S

30

1926

19

1926

26

1927

IS

1924

1927 1928 1929

8V2 7 10 y2

1930

6

1931

3

23

1928

17

1929

16

1930

9 • •

SOURCES OF D A T A :

Estimated diversion: Table 13, supra, p. 46. Beverage spirits produced: quantities diverted multiplied by 1.9, and fiscal years averaged to convert to calendar years.

Corn Sugar (Solid Glucose). The comparatively small use of industrial alcohol for beverage purposes is due to the fact that denatured alcohol must be de-denatured. The process of diversion and of de-denaturing is as difficult and more easily detected than the direct distillation of alcohol from sugar, glucose or molasses. Among the various products which are capable of being used for the production of beverage alcohol, solid glucose, now called corn sugar in the reports of the Census of Manufactures, and formerly called grape sugar, is the most convenient and one of the most extensively used. The production of corn sugar has increased enormously since 1923, for which there seems to be no explanation except its use in the making of beverage alcohol. It has been suggested that corn sugar is being used

5°

THE

ECONOMIC

RESULTS

OF

PROHIBITION

extensively in a number of industries: in foods, such as bakery products, confectionery, condensed milk, vinegar, caramel, sugar coloring and stock foods; in dyes, chemicals and finishes, such as pigments, lacquers, waterproofing materials and medicines; in soap, cosmetics and laundries, and in the manufacture of leather, textiles and artificial silk.17 Some of these alleged uses, however, have not been substantiated by investigation, and the quantity necessary for other uses is slight. In respect to some uses corn sugar has been confused with cornstarch and corn syrup. 18 Thus "linit" has been claimed to be corn sugar, but its manufacturer says it is a special form of cornstarch; the director of research of the national association of laundry owners reports that he has no knowledge of the use of corn sugar as a laundry sizing, and a cotton manufacturer reports that it is liquid glucose, rather than solid, that is used for textile sizing. 19 In other cases, persons associated with the industries concerned report that only slight use, if any, is made of corn sugar. Candy manufacturers say that they have experimented with the 17

Irving Fisher, 7 he Noble Experiment, pp. 279-281 ; and Possible Production of Illegal Liquor in the United States for the fiscal year ending June 30, 1930, pp. 13-14. 18 Perhaps the most striking example of this confusion is the f o l l o w i n g statement made by_ Mr. Robert E. Corradini, Research Secretary of the W o r l d L e a g u e Against A l c o h o l i s m ; " D o you happen to know that linit is corn sugar? Corn sugar exclusively, and nothing else but corn sugar? I suppose that every man in this audience carries an ounce and a half of corn sugar on his shirt and collar. There isn't a lady here that hasn't some corn sugar on her dress, or her gown, or whatever she is wearing today. Corn sugar is used by every' manufacturer in the line of textiles, by every Chinese laundry, and all of us have some corn sugar on our clothes." (Stenographic report of debate at the Women's University Club, N e w York City, January 24, 1930.) 19

Letters to the author.

CONSUMPTION

UNDER

PROHIBITION

51

use of corn sugar, but that its uses have proven very limited. A large soap manufacturer states that cane sugar is used almost exclusively in the manufacture of soap. 20 A survey of ice-cream manufacture in 1 9 2 7 indicated that only 2.1 per cent of the sugar used in that industry was corn sugar. 2 1 T h e most reliable list of uses of corn sugar is that published by the Associated Corn Products Manufacturers, as follows : 2 2 REFINED

WHITE

CORN

SUGAR

F o r infant feeding F o r diabetics F o r sugar tolerance test F o r surgical shock In the manufacture of ice cream In bread making In condensed milk

In fruit canning In the manufacture of candy 70

AND 8 0

CORN

SUGAR

Caramel or sugar coloring Vinegar In the manufacture of lactic acid In tanning In the manufacture of artificial silk

Unfortunately, estimates of the quantities of corn sugar used in these various industries are not available, except f o r artificial silk, and f o r the year 1 9 2 9 only, the total use of refined white sugar and the amount used in tanning. There is probably a great deal of significance in the fact that the manufacturers of corn products submit to trade compilers and to the Department of Commerce the distribution of sales of liquid glucose (corn s y r u p ) , but do not give any information whatever concerning the distribution among trades of the sales of solid glucose (corn s u g a r ) . 20

Letters to the author.

21

International Association of Ice Cream Manufacturers, Dairy Products and Kinds of Sugar Used in the Manufacture of Ice Cream, based on the sixth production and distribution survey of the Bureau of Service and Statistics. 22

Associated Corn Products Manufacturers, The of Corn (Chicago, 1930), p. 20.

Story

of a

Grain

THE

52

ECONOMIC

RESULTS TABLE

THE

USE

Year 1909 1914 1919 I020 I92I I922

Consumption Millions Pounds of per pounds capita 1.8 159 1.8 174 116 8? 149 270 484

I92S 1926 1927

535 697

I930

557

897 969 895 849

PROHIBITION

16

OF CORT* S U G A R I N T H E U N I T E D

1923 1924

1928 1929

OF

STATES,

Legitimate use (millions of pounds) MiscelRayon laneous manupurposes facture

1 9 0 9 TO

Balance (millions of pounds)

1930

Beverage spirits produced (millions of proof gallons)

1.1 0.8 1-4 2.5 4-3

197 201

4-9 4-6 6.0 7-6

18

55

6

259 326

26

205 208 211

24 26 34 40

293 446

47 60 72

637

8.3 7-4

213 216 219

693 604

45 64 69 60

6-9

221

59

569

57

33 29

SOURCES OF D A T A :

Consumption: 1909 and 1914 from the Census of Manufactures; 1919 to 1930 supplied by the Associated Corn Products Manufacturers, figures referring to sales rather than to production. Used Used 1929 by (letters

for miscellaneous purposes: computed at 1.8 pounds per capita. in rayon manufacture: estimated from the amount used in companies making 85 per cent of the total production of rayon to the a u t h o r ) .

Balance: consumption minus legitimate use. Beverage spirits produced: computed at the rate of 10 gallons of spirits, proof strength, per 100 pounds of corn sugar. T h i s computation is based on the assumption that most of the corn sugar used for alcohol production is "70," which contains 70 per cent dextrose and about 10 per cent other carbohydrates, and that between 80 and 85 per cent of these are converted to alcohol. This output of spirits per 100 pounds of corn sugar is also used by the Bureau of Prohibition (cf. Possible Production of Illegal Liquor in the United States for the fiscal year ending June 30,

¡930, p. 14). T h e total use of corn sugar showed no increase d u r i n g the decade prior to the adoption of prohibition, and, w i t h

COS'SUMPTION

UNDER

PROHIBITION

53

the exception of rayon, there is no evidence that the use of corn sugar f o r legitimate purposes has increased appreciably during the decade since its adoption. It is true that sales of refined white corn sugar, first put on the market in 1924, have g r o w n rapidly; but, f o r the most part, this f o r m of corn sugar has replaced other forms, especially pressed corn sugar, which is no longer made in large quantities. In Table 16, in which the production of beverage alcohol f r o m corn sugar is estimated, it is assumed that the legitimate use of corn sugar, apart f r o m the rayon industry, has since 1 9 2 2 remained at 1.8 pounds per capita per year, the rate of consumption in 1 9 0 9 and in 1 9 1 4 . T h i s is a very liberal estimate in view of the fact that during the three years f r o m 1 9 1 9 to 1 9 2 1 consumption declined to an average of 1 . 1 pounds per capita per year, and makes ample allowance f o r increased use of refined corn sugar in recent years. A s indicated above, more detailed figures are available of the use of corn sugar f o r legitimate purposes during the year 1929. In that year the total production of refined corn sugar amounted to 1 3 0 million pounds, leaving 765 million pounds as the production of grades 70 and 80. Of this amount approximately 7 2 million pounds were used in the rayon industry, 1 0 million pounds in tanning and 7 million pounds were exported. 2 3 It is hardly conceivable that more than 1 0 million pounds were used in the production of caramel, vinegar and lactic acid, especially in view of the fact that some manufacturers of these products report they do not use corn sugar. These include all of the uses f o r corn sugar claimed by the Associated 23 Production of refined corn sugar and exports in 1929 are given in Possible Production of Illegal Liquor in the United States for the fiscal year ending June 30, 1930, p. 1 3 ; the estimate of the amount used in tanning was furnished by the American Leather Chemists' Association.

THE

ECONOMIC

RESULTS

OF

PROHIBITION

C o r n P r o d u c t s M a n u f a c t u r e r s , and, a f t e r deducting these amounts,

the balance

million pounds.

unaccounted

This

for

is 62 million

in

1929

pounds,

is

or

10 per cent more than the estimate in T a b l e

666

nearly

1 6 above,

and indicates that that estimate is v e r y conservative. Corn Syrup

(Liquid

Glucose)

and Corn Starch.

Bever-

age alcohol can, of course, be produced f r o m corn syrup (liquid glucose) and f r o m starch, though the process is more complicated if the latter material is used.

H o w e v e r , the

production o f these commodities has changed little since 1920, and is mostly accounted for by k n o w n industrial uses. Confectioners,

bakers,

manufacturers

of

mixed

corn

syrups, j a m s , jellies, preserves and tobacco and the textile and paper trades all use corn s y r u p ; glucose in this f o r m being

more

convenient

than

in

the

solid

form.

quantities of corn syrup sold to these various

The

industries

are published annually, and the important changes since 1922 can be accounted for, thus indicating that there is no

appreciable

The

bulk

of

facturers of

diversion

to

the

production

corn starch is sold to grocers,

of to

f o o d products and confectionery, to

mills and laundries, and to exporters.

In T a b l e

alcohol. manutextile 17 the

sales of corn syrup, corn starch and the total production of starch are given since 1919. Corn Meal.

T h e mountaineers of the South have made

"corn liquor" f r o m corn meal since Colonial days, and it is to be presumed that m a n y of the smaller stills in operation since the adoption of

prohibition use corn meal as

their principal material. T h e per-capita consumption of corn meal, as indicated by production reported by the Census of declined steadily pounds per year.

f r o m 1899 to 1 9 1 9 at the rate of

2.7

T h e decline w a s then halted f o r a f e w

years, being resumed between halted.

Manufactures,

1923 and 1925, and again

T o assume, as one might be at first inclined to

CONSUMPTION

UNDER

55

PROHIBITION

T A B L E 17 PRODUCTION

OF

CORN

SYRUP

AND

OF

STARCH,

1919

TO

1930

(millions of pounds) Sales of corn syrup

Year

Sales of corn starch

Production of starch

784

1919

1,406

773

192O

1,236

671

I92I

1,025

839

1922

1,086

1,022

1923

1,012

788

I924

1,196

876

1925

1,060

799

1926

1,109

836

1927

1,065

906

1928

1,107

839

1929

I,III

880

1930

1,026

710

SOURCES

894

858

874 1,033 731 ...

OF D A T A :

Sales of corn syrup, and sales of corn starch : Associated Products Manufacturers. Production of starch: Census of Manufactures.

Corn

assume, that this halt in the declining consumption

of

corn meal is due entirely or chiefly to its use in the production of beverage alcohol w o u l d not be reasonable, f o r continuation of the annual rate of decline of 2.7 pounds a y e a r would have completely eliminated the normal

con-

sumption in 1927. It is much more reasonable to assume that the curve of normal use has

flattened

out since 1919» but at w h a t

level is hardly more than a guess. knowledge

that

some

corn

meal

Since it is common is used

for

beverage

alcohol, but it m a y be presumed that there is still considerable

use

of

corn

meal

for

other

purposes,

it

is

assumed, in the computations given in the f o l l o w i n g table, that

the normal

use of

corn

meal

per capita

has

not

declined below 14 pounds per year, as compared w i t h 20 pounds in 1 9 1 9 and 32 pounds in

1914.

THE

56

ECONOMIC

RESULTS TABLE

OF

PROHIBITION

18

PRODUCTION AND USE OF CORN MEAL IN THE UNITED STATES

Year 1899 1904 1909 1914 1919 1921 1923 1925 1927 1929

Production Pounds Millions per of capita gallons 27.8 733 23.6 56.0 46.7 21.6 16.3 10.7 10.9 12.2 9.O 9-5 10.1

326 20.0 19.8 21.4 153 15-7 16.3

Estimated normal use (pounds per capita)

Balance (millions of pounds)

17 IS 14 14 14

300 715 150 200 280

Beverage spirits produced (millions of proof gallons)

13 31 7 9 12

SOURCES OF DATA : Production: Census of Manufactures. Estimated normal use: based on the assumption that the precipitate and steady decline from 1899 to 1919 was halted, and that the curve of normal use has flattened out since 1919. Balance: computed from production and estimated normal use per capita. Beverage spirits produced: computed from the "balance" at the rate of 4.4 gallons of alcohol, proof strength, per 100 pounds of corn meal. F o r this yield, which is equivalent to 1 7 ! ^ pints of pure alcohol per 100 pounds of corn meal, see the Scientific American Cyclopedia of Formulas, ( N e w Y o r k , 1 9 1 1 ) , p. 934.

Corn, Rye and Other Grains. In the foregoing paragraph regarding the use of corn meal in making beverage alcohol no allowance has been made for corn purchased at small mills not reporting to the Census of Manufactures, or ground by the distillers. To a certain extent, of course, the quantity produced in this way is offset by a similar unrecorded production in pre-prohibition days. It is quite impossible to estimate how much more of this rurally produced and unrecorded "corn liquor" is produced now than in pre-war times. It is also impossible to estimate how

CONSUMPTION

UNDER

PROHIBITION

57

much rye and other grains are used in producing beverage spirits under prohibition. So-called " rye " whisky may be made from other materials than rye and artifically flavored.24 Cane and Beet Sugar. While ordinary sugar is not as convenient to use in the production of alcohol as corn sugar, the fact that cane and beet sugar can be obtained more readily than corn sugar or corn meal makes it probable that it is used rather extensively in the production of beverage alcohol. T o obtain an estimate of the quantity so used, however, is difficult, because of the extensive use of sugar for other purposes. The consumption of sugar has been growing steadily for many years, and also varies with the price of sugar and with the general price level. The best estimate of the normal consumption of sugar since 1920, aside from the effect of prohibition, is the following equation, derived by multiple correlation from data for the period from 1890 to 1 9 1 6 : Y = 1 4 . 5 1 2 X 1 — . 1 9 8 X 2 + 1 . 0 5 7 X 3 — 1 3 . 0 9 2 X 4 —691.520 where Y is the annual consumption of sugar in 10,000 tons; X i is the population of the United States in millions; X 2 is the average annual wholesale price of sugar in cents per 100 pounds; X 3 is the Bureau of Labor wholesale price index ( 1 9 1 3 base) ; and X4 is the number of years since 1889.

The coefficient of multiple determination, showing what per cent of the factors influencing the consumption of sugar are accounted for in this equation, is .998 after correction for the number of observations and variables, and the standard error of estimate 9.4 ten thousand tons. In order to enable readers not familiar with the significance of the coefficient of multiple determination and 24 In pre-prohibition years aibout one-fourth as much rye as corn was used in producing alcoholic spirits. (Statistics Concerning Intoxicating Liquors, 1930, p. 63).

58 the

THE ECONOMIC standard

error

of

RESULTS

OF

estimate

to

PROHIBITION note

the

degree

of

accuracy of this equation, there are given in the f o l l o w i n g table

the

data on which the equation

is based,

and

a

comparison of the estimate of consumption obtained f r o m the

equation

with

the

original

estimate

furnished

by

trade sources. TABLE 19 F A C T O R S I N F L U E N C I N G T H E C O N S U M P T I O N OF S U G A R I N

THE

UNITED STATES, 1890-1916

Year

Population in millions Xi

Average wholesale price of sugar I n d e x of (cents wholeper 100 sale pounds) prices x

2

62.9 63.8

617 464

65.1

1895

66.3 67.6 68.9

1896

70.3

1890 1891 1892 1893

1894

x3 81

Consumption of s u g a r Number (10,000 tons) of Estimate y e a r s Estimated from since from trade 1889 equation sources Y x< I 1-2 165

80

2

201

43S

75

3

207

484 412

77

4

204

212 208 214

E r r o r of estimate from equation

(10,000 tons) 7 —11 —

1

69

5

215

225

—10 —10

6

453

70 67

7

222 2l8

218 220

— 2

45o

67

8

225

232

—

497

70

9

224

224

415

4

1898

71.6 72.9

1899

74-3

492

75

10

238

233

5

76.1

532

81

11

249

0

79

12

249

263

84

13

291

1897

1900 190I 1902 1903 1904 IPOS

1906 1907 1908 1909 19IO

77-7 79-4

81.0 82.6 84.2 85.8 87.4

505

446 464 526 452

86 86 86 89

465

54

89.1

496

90

90.7

477

97

477

686

336

321

15

18

348

335

J3

19

350

357

371

365

416

98

25

100 123

26 27

413

419 421 426 410

96.5

100.8

17

100

I9I3

1916

295

393

95.1

556

308

392

I9I2

99-3

16

375

93

979

3IO

375

IOI

535

I9I5

307

381

497

93-7

1914

300

15

373

92.3

504 428 468

14

266 287 286

20 21 22 23 24

1911

99

7 0

405

412

—

3 4 14

—

3 13

—

7

6 6 2 —

1

—

3

—

8

—21

2

CONSUMPTION

UNDER

59

PROHIBITION

S O U R C E S OF D A T A :

Population of the United States, Statistical States,

Abstract

of the

United

Beet

Sugar

1931, p. 3-

Average

wholesale

price

of

sugar:

United

States

Association. I n d e x of wholesale prices:

Bulletin

of the Bureau

of Labor

Statistics,

N o . 440, p. 9. Consumption of sugar, estimate f r o m equation: computed by applying the

equation

Y = 15.412 X i — .198 X 2 + 1.057 X 3 — 13 092 X 4 — 6 9 1 . 5 2 0

to the preceeding columns. Consumption of sugar, estimate from trade sources: furnished by the United States Beet S u g a r

Association.

In the n e x t table, which carries the data and estimates of the preceding table f r o m 1 9 1 7 to 1930, the last column, "Error errors

of

estimate

of

estimate

from of

equation,"

the

same

sort

includes as

both

those

the

in

the

preceding- table and changes in consumption resulting f r o m additional

factors not operating d u r i n g the period

1890 to 1916.

w e r e the additional factors. undoubtedly

from

F r o m 1 9 1 7 to 1 9 1 9 war-time restrictions

been

the chief

Since 1920 prohibition has new

influence on

the

con-

sumption of sugar. T h e consumption of sugar since 1922 in excess of the quantity estimated f r o m the equation of relationship established above m a y reasonably be considered the result of prohibition.

It may, at first, be supposed that this excess

is due to the increased use of s u g a r in the f o r m of confectionery, ice cream and s o f t drinks, all stimulated reduced

consumption

examination, incorrect. United

however,

The

of

alcoholic beverages.

Statistical

indicates that this explanation

value of

confectionery

by

produced

is

in the

States per capita, when adjusted f o r changes in

the general price level, increased f r o m

1899 to 1 9 1 9 at

the rate o f five cents per year, dropped seven cents between 1 9 1 9 and 1921, and has increased since 1921 at approxi-

THE

6o

ECONOMIC

RESULTS

OF

TABLE FACTORS

INFLUENCING

THE

UNITED

1917

102.2

1918

103.6

20

CONSUMPTION

STATES,

Average wholesale price of sugar Index of (cents wholesale per 100 prices pounds) X2 X3

Population in millions Xi

Year

PROHIBITION

766

168

783

188

OF

SUGAR

IN

THE

1917-1930

Consumption of sugar (10,000 tons) Number of Estimate from years Estimated from since trade 1889 equation sources Y x4

Error of estimate from equation (10,000

tons)

28

451

413

38

29

4/6

392

84 15

1919

I05.0

900

199

30

471

456

1920

I06.5

1139

221

31

458

457

[

I92I

IO8.2

621

140

32

485

460

25

1922

109.9

590

139

33

SOI

570

—(>9

1923

111 5

844

144

34

467

535

—68

1924

113.2

747

141

35

494

544

—50

1925

114.8

548

148

36

551

617

—66

1926

116.5

547

143

37

558

635

—77

1927

118. i

583

137

38

554

593

—39

1928

119.8

554

I40

39

575

621

-46

1929

121.5

503

138

40

594

—57

1930

123.1

441

124

41

602

651 626

—-'4

S O U R C E S OF D A T A :

S a m e as T a b l e Bureau

of

Labor

Review.

mately

Labor

the

19, e x c e p t index of w h o l e s a l e prices, Bulletin Statistics,

N o . 493, p. 9, and issues of

pre-prohibition

rate.'"5

Between

of

the

the

Monthly

1910

and

1 9 1 6 the consumption of ice c r e a m increased at the rate of . 1 8 gallons per capita per year, while since 1 9 1 9 the rate of increase has been only .08 gallons per capita per year. 2 6

carbonated

bev-

erages has increased at a rate slightly g r e a t e r than

that

2r'

Cf.

Since

T a b l e 93, infra,

adjusted

for

measure

of

the

best

1 9 x 9 the consumption of

changes

p. 191. in the

the quantity

measure

of

available,

Cf.

T a b l e 93, infra,

price

confectionery since

e x c e p t f o r v e r y recent y e a r s . 20

T h e v a l u e of c o n f e c t i o n e r y , even when

general

p. 191.

no

level,

is not

consumed.

quantity

figures

It

an

accurate

is,

however,

are

available

CONSUMPTION

prior to prohibition.

UNDER

PROHIBITION

61

T h e s u g a r consumed in bottled car-

bonated beverages has increased in recent y e a r s at a rate of one-fourth of a pound per capita per year, w h e r e a s the consumption of sugar unaccounted f o r b y f o r c e s o p e r a t i n g in pre-prohibition days varied f r o m 9 to 13 pounds y e a r per capita between

1922 and

per

1926, and between

4

and 9 pounds per capita per y e a r between 1927 and 1930. The

sugar

consumed

in

other

soft

drinks

cannot

estimated, but is doubtless less than that in

be

carbonated

beverages. 2 7 Since confectionery, ice cream and s o f t drinks do not account in any appreciable degree f o r the abnormally l a r g e consumption

of

sugar

since

1921,

it

is

reasonable

assume that that consumption is due to the use o f in the production

that

the

20 are

the

figures

as an estimate o f

the

s u g a r used in the production of

alcoholic beverages,

we

figures

given

of

alcoholic

in the last

beverages,

column

of

and

to

sugar

Table

approximate quantities so used. But b e f o r e using these should

make

w h a t allowance

errors of estimate.

we

can

for

the

ordinary

F o r this, w e m a y assume that no such

error is greater than three times the standard error, 28

ten

positive

thousand

tons. 28

and

maximum

the

If

we

adjust

negative

the

or

maximum

deviations

in

the

last column of Table 20 by this amount, and the other deviations in proportion to their difference f r o m the mid2 7 F o r the consumption of carbonated beverages see T a b l e 92, infra, p. 186. T h e sugar content is estimated to be about .85 of an ounce per half-pint bottle (letter f r o m the A m e r i c a n Bottlers of Carbonated Beverages). 2S

" In most statistical w o r k , three times the standard error is taken

as the greatest extent to which a given result is likely to be w r o n g . " ( M o r d e c a i Ezekiel, Methods p. 23).

of Correlation

Analysis,

N e w Y o r k , 1930,

In the present case, there is about one chance in 170 of an

error greater than this.

62

THE

ECONOMIC

RESULTS

OF

PROHIBITION

point between the maximum positive and the maximum negative deviations, we will be reasonably certain of avoiding an overestimate of the excess of sugar consumption above normal, and at the same time will have "smoothed" the annual variations in the estimate of excess consumption of sugar on account of prohibition. In the following table this adjusted estimate of the excess of sugar consumed above normal, which is the most reasonable estimate we can make of the quantity of cane and beet sugar used in the production of beverage alcohol, is given, and also the estimated quantity of beverage spirits produced therefrom. 2 8 T A B L E

21

E S T I M A T E OF BEVERAGE SPIRITS PRODUCED FROM C A N E AND B E E T SUGAR Deviation of s u g a r consumption f r o m the computed n o r m a l (10,000 t o n s )

Adjusted deviation of s u g a r consumption f r o m the computed normal (10,000 t o n s )

Estimated production of beverage spirits (millions of proof gallons)

1921

—25

3

7

1922

69

45

108

1923 1924

68

45

108

50 66

37

89

44

106 118

1925 1926

77

49

1927

39

32

77

1928

46

84 96 60

1929

57

35 40

1930

24

25

- 8 A part of the sugar estimated to have been used in the production of {leverage spirits may have been used in the production of home-made beer, since sugar is often added to malt syrup when beer is made at home. In so far as this is the case, the estimate of beverage spirits produced given in Table 21 is too high. The estimate of pure alcohol consumed given in Table 30, infra, p. 72, is not, however, too high; for when sugar is added to malt syrup in making beer, the alcoholic content is likely to be higher than 4 per cent.

CONSUMPTION

UNDER

PROHIBITION

63

SOURCES OF D A T A :

Deviation of sugar consumption f r o m the computed n o r m a l : f r o m last column, " E r r o r of estimate f r o m equation," T a b l e 20, supra, p. 60. A d j u s t e d deviation of s u g a r consumption f r o m the computed n o r m a l : the extreme cases, 1921 and 1926, modified by three times the standard error of estimate, or 28 ten thousand t o n s ; other years modified in proportion to their difference f r o m the mid-point, 26. Estimated production of beverage spirits: computed f r o m the adjusted deviation of sugar consumption at the rate of 12 gallons per 100 pounds, or 2.4 million gallons per 10,000 tons of sugar. T h i s is on the basis of 80 per cent conversion of sugar into alcohol, the theoretical m a x i m u m being about 15 gallons, proof strength. T h e larger stills probably obtain 85 per cent conversion, but doubtless much of the cane and beet sugar is used in small stills which are less efficient.

Molasses. important alcohol. of

M o l a s s e s , especially b l a c k - s t r a p , is the m o s t material

in the p r o d u c t i o n

of

industrial

I t is likely, t h e r e f o r e , that it is u s e d by m a k e r s

beverage

presented and

used

alcohol.

the

In

available

importation

of

the

figures

following regarding

table the

there

are

production

molasses. T A B L E 22

THE

PRODUCTION A N D IMPORTATION OF M O L A S S E S

(millions of gallons)

Year

1914 1919 I92I 1923 IQ2S

1927 1929 (a)

Beet sugar industry (a)

Cane Cane sugar sugar industry industry blackother than strap blackstrap

26.5 18.8 26.9 l8.0 24-S(c) 131(c) 13.0(c)

20.7 20.1 9-7 6.1 5-5 3-3 7-5

(b) (b) 12.2 9-6 97 2.3 9.6

Cane sugar refining (a)

35-4 44.I 31-8 41.1 45-9 36.6 36.5

Total production

Net imports

Available for consumption

82.9

50.4

83.O 80.6 74-8

II3-5 72.5 l8l.O

133.3 196.5 153.1 255-8

85.5 55-2 66.6

253.8 238.8 3036

339-3 294.0 370.2

Includes refiner's syrup, blackstrap and non-edible syrup.

(b)

N o t reported separately from other

(c)

Converted f r o m tons to gallons at the rate of 171 gallons per

molasses.

ton, this being the ratio in 1921, for which figures are available in both tons and gallons.

64

THE

ECONOMIC

RESULTS

OF

PROHIBITION

SOURCES OF D A T A :

Census of Manufactures; Statistical Abstract of the United Statit. 1930.

T h e greater part of this molasses is used in the production of industrial alcohol. Other uses are probably diminishing, or, at least, not increasing. In the following computation of the quantity available f o r the production of beverage alcohol, it is assumed that since 1 9 2 1 the normal consumption of molasses f o r miscellaneous purposes has remained at .52 gallons per capita per year, the average f o r the three years 1 9 1 4 , 1 9 1 9 and 1 9 2 1 . It is believed that, while there are doubtless fluctuations f r o m year to year, this figure is approximately correct f o r most years. T A B L E

23

U S E OF M O L A S S E S IN T H E UNITED

Year

Available f o r consumption (millions of gallons)

Used for industrial Balance alcohol Balance (millions (millions (gallons of gallons) of gallons) per c a p i t a )

STATES Available for beverage alcohol (millions of gallons)

E s t i m a t e of alcohol produced (millions ol gallons)

1914

133-3

94.O

39-3

1919

196.5

118.3

78.2

-74

1921

I53-I

I08.I

45-0

•41

1923

255-8

151-9

103-9

•93

45-7

34

I92S 1927

339-3

235-3

104.0

.91

44-8

34

294.0

212.6

81.4

.69

20.1

15

1929

370.2

251-9

118.3

•97

54-7

41

SOURCES

•41

OF D A T A :

A v a i l a b l e f o r c o n s u m p t i o n : T a b l e 22, supra,

p. 6 3 .

Used

Concerning

Liquors,

for

industrial

alcohol:

D e c e m b e r , 1930, p. 6 3 .

b e v e r a g e alcohol is included. y e a r s by

averaging

Statistics

Intoxicating

F o r 1 9 1 4 and 1 9 1 9 the molasses used f o r F i g u r e s converted from

s u c c e s s i v e fiscal

Available for beverage alcohol:

fiscal

to calendar

years.

computed f r o m the preceding column

by a l l o w i n g . 5 2 gallons per capita, the a v e r a g e f o r 1 9 1 4 , 1 9 1 9 and for

miscellaneous

1921,

purposes.

B e v e r a g e alcohol p r o d u c e d :

computed

f r o m the quantity of

molasses

a v a i l a b l e f o r b e v e r a g e alcohol at the rate of .75 gallons alcohol,

proof

CONSUMPTION

UNDER

PROHIBITION

65

strength, per gallon of molasses. This is on the basis of an average of 6.24 pounds of fermentable sugar per gallon and 80 per cent conversion. This rate may also be computed by deducting from the legitimate production of alcohol, as reported in Statistics Concerning Alcoholic Liquors, the quantities probably produced from other materials, for any recent year, and computing the ratio between the balance and the quantity of molasses used.

Malt

Syrup.

I t has been stated that in some parts of

the country malt s y r u p is used w i t h corn s u g a r in m a k i n g whisky. 3 0

If

this

is

generally

true,

the

carbohydrates

contained in that syrup m a y contribute a substantial quantity of alcohol to the nation's consumption. figures

on the extent o f

However, no

this practice are available,

nor

even on the quantity of malt s y r u p used f o r all purposes. The

alcohol

obtained

from

this

source

is,

accordingly,

omitted f r o m our computations. Fruits

and

Vegetables.

Alcoholic

spirits can also

be

produced f r o m any starchy vegetable or s u g a r y fruit.

In

northern E u r o p e potato w h i s k y is a w e l l - k n o w n beverage. It is not likely, however, that potatoes and other vegetables are used to a great extent in the U n i t e d States f o r the production of beverage alcohol. fruits,

for

there are

frequent

T h i s cannot be said o f reports that

considerable

quantities of apple cider are converted into " a p p l e j a c k . "

31

B u t statistical evidence r e g a r d i n g " a p p l e j a c k " is entirely lacking,

so that this source

omitted

f r o m our

of

beverage

spirits is

also

computations.

30 Hugh F. Fox, " The Present Consumption of Alcohol in the United States," The Periscope, April, 1927. 3 1 Only one such report will be quoted here. " Concealed in a labyrinth of tunnels running under a garage and a dog kennel, a huge applejack plant, with equipment and liquor valued at $200,000 was discovered yesterday in Norwood, Bergen County, by ten agents from Federal prohibition headquarters in Newark. . . . Three 5,ooo-gallon continuous process stills and 12,500 gallons of applejack in barrels and tanks were reported f o u n d " ( T h e New York Times, Feb. 1, 1931, p. 22).

66

THE

ECONOMIC

RESULTS

OF

PROHIBITION

The Total Production of Beverage Spirits. If we bring together the estimates in the f o r e g o i n g paragraphs, we have the following table showing the estimated total production of beverage spirits in the United States. TABLE

24

ESTIMATE OF BEVERAGE SPIRIT PRODUCTION IN THE UNITED STATES

(millions of proof gallons) Year

From industrial alcohol

From corn sugar

From corn ir.eal

1921

13 16

6

13 22(a)

1922

1923

20

26

31

1924

23

33

19(a)

1925

30

29

7

1926

26

45

8(a)

1927

IS

9

1928

17

64 69

1929

16

60

9

57

1930

From cane and beet sugar

10(a)

From molasses

Total

108

17(a)

169

108

34

219

7

33

34(a)

198

106

34

206

118

24(a) 15 29(a)

221

89

77

12

84 96

41

10(a)

80

30(a)

180 209 225 166

(a) Interpolated. SOURCES OF DATA :

From From From From From

industrial alcohol: Table 15, supra, p. 49. corn sugar: Table 16, supra, p. 53. corn meal: Table 18, supra, p. 56. cane and beet sugar: Table 21, supra, p. 62. molasses: Table 23, supra, p. 64.

T h e relative importance of the various materials used f o r beverage alcohol, as indicated in the above table, may be compared with the relative importance of the same materials, as indicated by the reports of the Bureau of Prohibition r e g a r d i n g materials seized by prohibition agents. 32 T h e seizures by Federal agents are an actual 32

Unfortunately these reports are available for only the first four months of 1930. The Bureau of Prohibition states that they were not compiled prior to January 1930, and refuses to disclose them since April of that year.

COX SU MPT I ON UNDER sample They

of are

the materials not

a

perfect

used

PROHIBITION throughout

sample,

67

the

however,

country.

since

seizures are made in some sections of the country in other

sections,

and the materials

same in all sections of the country.

used

are

not

more than the

F e d e r a l agents prob-

ably seize a larger part of the corn s u g a r used at distilleries than of corn meal or o r d i n a r y s u g a r , since the corn s u g a r is principally used in the l a r g e r urban stills,

and

corn meal and ordinary sugar in smaller stills. T A B L E R E L A T I V E I M P O R T A N C E OF M A T E R I A L S

25 USED IN

PRODUCING

BEVERAGE

SPIRITS S e i z u r e s by Federal agents four months of 1930 ( 1 0 0 0 proof g a l l o n s )

Material

Corn sugar Cane and beet sugar Alcohol and alcoholic preparations Molasses Corn meal and grain

Percentage seizures by F e d e r a l agents

Percentage computed f r o m Table ¿4 for the years 1929 a n d 1930 1929 1930

1,057 703

51-7 34-5

26.7 42.7

34.3 36.2

151 99 30

7-4 4.9 1.5

7-i 18.2 S3

5-4 18. i 6.0

2,040

100.0

IOO.O

100.0

S O U R C E S OF D A T A :

Seizures by Federal agents: "Stills and Distilling Material Seized by Prohibition Administrators and Special Agents," January to April, 1930, furnished by the Bureau of Prohibition. Percentage seizures by Federal agents: computed from the previous column. Percentage computed from Table 24: computed from the last two lines in that table, supra, p. 66.

Smuggled

Spirits.

F o r the fiscal year ending J u n e 3 0 ,

1 9 3 0 , the B u r e a u of Prohibition estimated the total quantity

of

spirits s m u g g l e d

into the United

States

at

3.6

million gallons, which compares with 1 . 4 million gallons

68

THE

ECONOMIC

RESULTS

OF

PROHIBITION

exported f r o m Canada to the U n i t e d States. 3 3

T h i s esti-

mate is the most accurate that has been made

regarding

s m u g g l e d spirits, and it will not be unreasonable to assume that

the

United

total

quantity

States

each

of

year

spirits

since

smuggled

prohibition

into

is

approxi-

mately t w o and a half times the quantity shipped Canada.

ESTIMATE

OF

SPIRITS

SMUGGLED

I922

.1

1923 I924

•3

proof

y* Va X 1

1-4 T.6

4

1928

1-7

4

1929

i-S

4

I930

i-4

3Vi

OF

3/2

DATA :

Canada:

External

by

Trade

fiscal

1.2 to convert

of

Sta-

y e a r s ending M a r c h 31, and have

Branch,

been

from

Dominion

Imperial

gallons

Bureau to United

States

X o correction has been made f o r the difference between British

and United

From

STATES

From all countries (millions of gallons)

States proof, since this w o u l d m a k e no

d i f f e r e n c e in the total estimate of s m u g g l e d from

UNITED

2

Figures are for

gallons.

THE

•4 .8

1927

multiplied

INTO

1921

I92S 1926

From

26

From Canada (millions of U. S. gallons) L e s s than .1

Year

tistics.

from

T h i s is the assumption in T a b l e 26. TABLE

SOL'KCF.S

the

all

countries:

computed

at

appreciable

spirits.

times

the

quantity

shipped

Canada.

Medicinal

Alcohol.

A s a final source of

spirits

con-

sumed in the United States, there is medicinal alcohol. 33

fiscal figure

Possible year

Production ending

June

of Illegal so,

is g i v e n as 1.1 gallons.

is f o r the C a n a d i a n

fiscal

Liquor

1930, p. 48. The

figure

in the United

States

In this report the of

for

the

Canadian

1.4 gallons g i v e n

y e a r ending M a r c h 31, 1930, converted

I m p e r i a l to U n i t e d States gallons.

In

above from

CONSUMPTION

UNDER

PROHIBITION

69

the f o l l o w i n g table there are given the quantities of alcohol and

alcoholic

liquors

(whisky,

brandy,

gin

and

rum)

received by physicians and reported as sold on physicians' prescriptions.

In estimating the total equivalent in proof

spirits it is assumed that the alcohol is 190 proof, and the alcoholic liquors 40 per cent by volume. T A B L E 27 MEDICINAL ALCOHOL USED IN THE UNITED STATES Received by physicians and hospitals (1000 gallons) Alcoholic Alcohol liquors N o t reported

Year ending J u n e 30 1922

Sold on physicians' prescriptions (1000 gallons) Alcoholic Alcohol liquors 6 999

Total (millions of proof gallons) 1.0

1923 1924

67 106

63 78

2

1,399

1-3

3

1,595

1925 1926

122 144

95

2 2

1,659 1,588

1-5 1.6

1927

99

1 1

i,444 1,421

1.6

1928

175 190

1929

208

1

1,400

1.6

1930

223

1

1,306

1931

317

95 98 119

1

M57

1-7 1.6

97 95

1.6 1.6

SOURCES OF DATA : Received scriptions:

by

physicians

Statistics

and hospitals,

Concerning

and

sold on physicians'

Intoxicating

Liquors,

pre-

D e c e m b e r , 1931,

PP- 9-I3Total:

computed f r o m the preceding columns on the basis of

190

proof f o r alcohol and 40 per cent alcoholic content f o r the liquors.

The

Consumption

of

Alcoholic

Spirits.

By

adding

together the estimates of beverage spirits produced in the United States, spirits smuggled into the country and those legally

sold

f o r medicinal purposes,

and deducting

the

alcohol equivalent of spirits and materials seized by Federal prohibition agents, an estimate is obtained of the total consumption of alcoholic spirits in the United States each year since 1921.

N o allowance is made in this estimate

THE

7°

ECONOMIC

RESULTS

OF

PROHIBITION

f o r seizures by local and State officials, nor, on the other hand, f o r spirits made f r o m vegetables, fruits or directly f r o m grains. T A B L E ESTIMATE

OF

ALCOHOLIC

SPIRITS

1921

28

CONSUMED TO

IN

THE

UNITED

STATES,

Total

Spirits seized by prohibition agents

Estimate of spirits consumed

1930

(millions of proof gallons)

Year

1921 1922 1923

1924 1925

1926 1927 1928 1929 1930

Beverage spirits produced in the United States

Spirits smuggled into the United States

Medicinal spirits

33

I

34

I

33

169 219 198 206 221 180 209 225 166

I

170 221 201

I

169 219 198 207 223 181 210 226 164

I

I

I

2 2

2

2IO

2 3 3

4

2 2

226 l86

4

2

215

5

231

5

3

4 3

2 2

171

3 5

7

S O U R C E S OF D A T A :

Beverage spirits produced in the United States: Table 24, supra, p. 66. Spirits smuggled into the United States: Table 26, supra, p. 68, averaged for calendar years, and fractional parts of a million gallons omitted. Medicinal spirits: Table 27, supra, p. 69. Spirits seized by prohibition agents: Statistics Concerning Intoxicating Liquors, December, 1930, pp. 72-73. Seizures of wine, cider, mash and pomace, which are doubtless mostly mash, have been converted to spirits at the rate of 1 gallon of proof spirits for each 6.3 gallons of mash. This ratio is obtained from statistics presented in "Stills and Distilling Material Seized by Prohibition Administrators and Special Agents," January to April, 1930.

This completes the estimates of alcoholic beverages consumed since the adoption of prohibition as estimated

CONSUMPTION

UNDER

PROHIBITION

71

f r o m the sources of production. In Table 29 these estimates are summarized f o r spirits, wine and beer. The estimates f o r spirits are in terms of gallons of 50 per cent alcohol, by volume. Since spirits are usually sold, or, at least, drunk, in weaker solutions than this, the consumption in ordinary gallons is considerably larger than the figures in the table. TABLE THE

CONSUMPTION

29

OF ALCOHOLIC BEVERAGES

IN THE UNITED

STATES,

1 9 2 1 TO 1 9 3 0

Estimates Obtained From Sources of Production Year

Spirits

1921

33 169

1922

Millions of gallons Wine Beer

Spirits

Gallons per capita Beer Wine I.26

48

136

•30

•44

188

•57

I.7I

250

1-54 1.96

•95

2.24 2.84

1923 1924

219

63 106

198

102

321

1.75

.90

1925 1926

207

398

1.80

.86

346

223

99 122

490

1.91

1.05

4-21

1927

181

128

1.08

210

128

595 726

1-53

1928

1.75

1.07

5-03 6.05

1929

226

108

864

1.86

.89

7. I I

1930

164

107

850

i 33

.87

6.90

SOURCES OF D A T A :

Spirits: Table 28, supra, p. 70. W i n e : Table 10, supra, p. 40. Beer: Table 6, supra, p. 33-

T h e estimated consumption of beverages is given in Table 30.

pure alcohol in these

72

THE

ECONOMIC

RESULTS T A B L E

THE

CONSUMPTION

OF

PROHIBITION

30

OF P U R E A L C O H O L

IN THE U N I T E D

STATES,

1921 to 1930 Estimates

la spirits (millions of gallons) 17 85 110 99

Year 1921

1922 1923 1924 192S

104 112

1926 1927

91

1928

105

1929

113

1930 SOURCES

Obtained

82 OF

DATA:

From

Sources

of

Production

Total In beer In wine Total (gallons (millions (millions (millions per of gallons) of gallons) of gallons) capita) .26 5 5 27 6 8 •90 99 11 10 1.17 131 10 10

13 16

122

I.08

130

I.I3

12

20

144

13 13 11 11

24 29 35 34

128

1.08

147 159

123

127

1.03

computed f r o m T a b l e 29, supra,

1.24

1.31

p. 71, assuming

wine to have an a v e r a g e alcoholic content of 10 per cent and beer of 4 per cent.

T h e estimate of pure alcohol contained in spirits may be

too high, and that contained in beer too low, on account of the use of sugar in making home-brew.

Cf. footnote 29, supra, p. 62.

CHAPTER THE

CONSUMPTION

OF

III

ALCOHOLIC

PROHIBITION : E S T I M A T E

BEVERAGES

FROM D E A T H

UNDER

RATES

THE second method of estimating' the consumption o f alcohol at the present time is f r o m its effects upon the death rate.

D e a t h s f r o m alcoholism and f r o m cirrhosis

o f the liver are only a small part of the total deaths each year, and the use of alcohol is only a contributing cause o f cirrhosis o f the liver. 1 association and

the

between

death

consumption

of

There rates alcohol

is, however, so much

from per

these t w o capita

causes

that

it

is

possible to use these death rates to estimate within reasonable limits the consumption of alcohol. 1 " W i t h regard to the question whether or not alcohol is the cause of cirrhosis, clinical and experimental evidence are opposed. In practice there are f e w points more certain than that the abuse of alcoholic drinks is a frequent precursor of hepatic cirrhosis, while from e x p e r i ments on animals the bulk of the evidence is in a contrary direction . . . Since alcohol alone is not sufficient to account for cirrhosis either in man or animals, the undoubted association between alcoholism and cirrhosis must be explained in some other w a y . . . Per se alcohol has no specific action of the liver except fatty degeneration. It gives rise to cirrhosis in a secondary manner, either by leading to the production of sclerogenic poisons or by enabling such poisons to have full s w a y on the liver." ( S i r H u m p h r e y Rolleston and John W m . M c N e e , Diseases of the Liver, Gall-bladder and Bileducts, third edition, pp. 209-14.)

" D r . A . M . Snell, of the M a y o clinic, Rochester, Minn., told the physicians that the common belief that the use of alcohol w a s the cause of cirrhosis, or the hardening of the liver, w a s erroneous. ' F o r years,' said D r . Snell, 'it has been assumed by doctors and laymen that cirrhosis, or hardening of the liver, is due to alcoholism. However, w e k n o w n o w that cirrhosis occurs in only 4 per cent of alcoholic i n d i v i d u a l s . ' " (The New York Times, M a r c h 26, 1931, p. 1 ) .

73

THE

ECONOMIC

RESULTS

OF

PROHIBITION

F e w countries have sufficiently accurate records of

the

annual per capita consumption o f alcohol and the annual death rates f r o m alcoholism and cirrhosis of the liver to make possible statistical studies o f the relationship between them.

N o t m a n y have death rates reliably recorded.

In

w i n e - c o n s u m i n g countries estimates of the per capita consumption of wine are based on estimates of which

vary

widely

from

year

fluctuations in g r a p e production.

to

year

production,

in accord

with

O n l y in D e n m a r k , G r e a t

Britain, and the U n i t e d States are the records of both the consumption

of

alcohol

and

the

mortality

of

diseases

related to the use of alcohol sufficiently reliable f o r comparison o v e r a considerable length of ALCOHOL CONSUMPTION

time.

AND T H E DEATH

UNITED

R A T E IN

THE

KINGDOM

In the U n i t e d K i n g d o m of G r e a t Britain and Ireland, where all the w i n e used is imported and w h e r e t a x records provide accurate reports on the use of beer and spirits, Lhere are alcoholic

reliable

records, both

beverages and of

of

deaths

the consumption f r o m alcoholism

of and

f r o m cirrhosis of the liver, back to 1891.

In 1 9 1 0 a new

classification of

statistics

deaths w a s adopted, but

were

compiled a c c o r d i n g to the old classification up to

1920.

T h e r e are thus consistent and continuous series of

figures

f o r the thirty-year period f r o m f o r the period since When the

statistical

coefficients

of

1891 to 1920, and also

1910. methods are correlation

applied to these given

in

Table

series, 31

are

derived. T h e general type of equation o f relationship in all these cases is l o g y =

ax +

b, where y is the death rate f r o m

alcoholism, cirrhosis of the liver, or both causes, and

x

is the consumption per capita of spirits, beer or alcohol.

CONSUMPTION

ESTIMATE

FROM

TABLE ALCOHOLIC

DEATHS

AS

RELATED

DEATH

RATES

75

31

TO

ALCOHOL

CONSUMPTION

IN

THE

UNITED KINGDOM OF GREAT BRITAIN AND IRELAND Correlation coefficient

Correlation between Consumption oi Death rate from

Spirits

1890-1920

1911-1927

alcoholism, no l a g

"

"

"

.974

1 year lag

.927

cirrhosi») no l a g "

"

.919

1 year lag

.931

both causes, no l a g 1 year lag

Beer

.926

.938

.925

.936

alcoholism, no l a g "

"

.850

1 year lag

.872

cirrhosis, no l a g

"

"

"

.769

1 year lag

.912

both causes, no l a g

"

"

Alcohol

"

.932

1 year lag

.792

.984

.916

alcoholism, no l a g

"

"

.911

1 year lag

"

cirrhosis, no l a g

"

both causes, no lag

.916 .832

1 year lag

.849

1 year lag

.943

.845

.983

.949

SOURCES OF D A T A :

S t a t i s t i c s of c o n s u m p t i o n : Statistics the

of d e a t h s :

Variations

during

The

George the

Last

Alliance

Year

B. W i l s o n , Twenty

Book,

"A

1931, pp. 320-321.

Statistical

Years

in

the

Review

of

Consumption

of I n t o x i c a t i n g D r i n k s in the U n i t e d K i n g d o m , a n d in C o n v i c t i o n s f o r O f f e n s e s C o n n e c t e d w i t h I n t o x i c a t i o n , w i t h a D i s c u s s i o n of the to w h i c h

these

Variations

Statistical

Socicty,

January,

may

be

Ascribed,"

1912, pp.

Journal

of

183-247; and annual

the

Causes Royal

reports

of

the R e g i s t r a r s - G e n e r a l f o r E n g l a n d and W a l e s , S c o t l a n d and Ireland. Correlation

coefficients:

computed

by

the

usual

method

for

linear

correlation, using the l o g a r i t h m s of the death rates.

In Great Britain d u r i n g these y e a r s there w a s a tendency f o r the consumption of beer and that of spirits to increase or decrease together, and on that account the most significant of the correlations is that between the total consumption of alcohol and the combined death rates f r o m alcoholism and cirrhosis of the liver. T h e relationship between

76

THE ECONOMIC

RESULTS

OF

PROHIBITION

these v a r i a t e s is closer if the d e a t h rate is l a g g e d a y e a r than

if

they

are

taken

for

the

same

s u m a b l y , t o the d e l a y e d e f f e c t o f rate f r o m c i r r h o s i s o f the liver.

period,

due,

pre-

a l c o h o l u p o n the d e a t h

I n this case the e q u a t i o n s

o f relationship a r e log y =

.27X +

1.34 ( f o r 1890-1920), and

log y =

,28X +

X.23 ( f o r

1911-1927),

w h e r e y is the d e a t h rate f r o m a l c o h o l i s m a n d

cirrhosis

o f the liver per million p o p u l a t i o n , a n d x is the per c a p i t a consumption spirits per

of

alcohol

expressed

in

gallons

of

proof

capita.

T h e s e coefficients o f c o r r e l a t i o n in T a b l e 3 1 a p p e a r to be v e r y h i g h , but since t h e y a r e l a r g e l y d u e t o s i m i l a r i t y o f the t r e n d s o f a l c o h o l c o n s u m p t i o n a n d o f

death

rates

f r o m a l c o h o l i s m a n d cirrhosis, their s i g n i f i c a n c e needs to be tested by c o r r e l a t i n g d e v i a t i o n s f r o m those trends.

In

the case o f the relation b e t w e e n t o t a l alcohol c o n s u m p t i o n a n d the d e a t h rate f r o m the t w o diseases f o r the period from

1890 t o

coefficient o f

1920,

with

correlation

deaths

lagged

between

one

deviations

year, from

the para-

bolic trends is .960, i n d i c a t i n g that d e v i a t i o n s o f death rates f r o m the trend of alcohol c o n s u m p t i o n a c c o u n t f o r 9 2 per cent o f the d e v i a t i o n s f r o m the t r e n d o f deaths f r o m alcoh o l i s m and cirrhosis. It is h i g h l y probable, o f course, that the trends, as well as

the

deviations

from

the

trends,

are

causally

related.

A t a n y rate, in e s t i m a t i n g the c o n s u m p t i o n o f alcohol f r o m the death rates, the t r e n d s h a v e t o be t a k e n into a c c o u n t a n d the m o s t c o n v e n i e n t w a y use o f

w i t h o u t the e l i m i n a t i o n o f To

estimate

the

rates in the case o f are

of

d o i n g this is to

the direct relationships b e t w e e n the t w o

make

variates,

trends.

consumption the U n i t e d

of

alcohol

Kingdom,

from the

death

equations

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

77

x

— 3-5^8 log y — 4.56 ( f o r 1 8 9 0 - 1 9 2 0 ) , and x = 3 . 2 4 5 log y — 3.79 ( f o r 1 9 1 0 - 1 9 2 7 ) , where x is the per capita consumption of alcohol expressed in gallons of proof spirits per capita, and y is the death rate f r o m alcoholism and cirrhosis of the liver per million population. In Table 3 2 a comparison is made between the estimates of alcohol consumption obtained f r o m these equations and the original estimates of consumption based on imports and taxes on alcoholic beverages. The deviations given in the last column of Table 3 2 are the errors involved in estimating the consumption of alcohol f r o m the combined death rate f r o m alcoholism and cirrhosis of the liver. T h e standard error of the estimates f o r 1 8 9 0 - 1 9 2 0 is . 1 3 , and f o r 1 9 1 1 - 1 9 2 7 it is .19. 2 T h a t is, there is one chance in three that an error in the computed estimate of consumption will be larger than this. In view of the fact that the causes of death are not always accurately reported, the fact that cirrhosis of the liver does not invariably occur with the use of alcohol, and the fact that it may occur without the use of alcohol, the smallness of these errors is remarkable. 3 T h e largest errors 2 The standard error of estimate used here and in later pages is the corrected standard error: that is, adjusted for the number of observations, so that it is the standard error of estimate which is most probably true for the universe from which the statistics used are samples. (Cf. Mordecai Ezekiel, Methods of Correlation Analysis, pp. 121-124). 3

Since the computations in Table 32 were made, the figures of deaths from alcoholism and cirrhosis of the liver in Great Britain have been published for 1928 and 1929: 50 per million population in 1928 and 48 per million in 1929. Applying the equation given above, the estimate of alcohol consumption is 1.73 gallons in 1927 and 1.66 gallons in 1928. The estimates given in the Alliance Year Book for 1931 are 1.71 for 1927 and 1.65 for 1928. The errors of estimate for these two years are thus .02 and .01, respectively. The equation is thus as valid for the years since 1927 as for the years to which the curve was fitted.

78

THE ECONOMIC

RESULTS TABLE

CONSUMPTION

1891

3-55

1892

351 3-44

1893 1894 1895 1896

3-42 346 3.58

PROHIBITION

32

OF ALCOHOL AND THE ALCOHOUC DEATH GREAT

Consumption of alcohol Year 1890 3-52

OF

BRITAIN

Death rate from alcoholism and cirrhosis b a 171

AND

Consumption computed from the death rate a. b

—•17 —.08

3-43 3-29

173 158

Deviations from original estimate of consumption a b —.09

343 338

173 168

3-35

— 'S —.07

165 172

3-4-2

—.04

3-54

—.04

185

353 3-68

—.10

1897 1898

3-63 3-68

1899 1900

3-79

185 204

3-74

.00

3.83

•04

224

3-67

1901

364

203

356

—.07 —.08

1902

3-56

3-45

—.11

1903

3-45 3.32

189 176

3-41

—.04

171

3-39

.07

169

3-35

.16

165 162

3-32

.11

3-17

—.01

I47

305

.00

136 121

2.87

1904 1905 1906 I907 1908 1909 1910

319 3-21 3.18 3-05 2.82

I9H

2.79 2.89

1912 1913 1914 1915 1916 1917

RATE IN-

IRELAND

2.86

•05 .14

2.86

.08

.07

126

113

2.93 2.97

2.86

I29

2.96

.22

138 I42

113 120

3.08

2-95 2.86

3-12

2.76

-.19

104

2.97

2.89

•17 .11

2.61

I29

114

2.62

2.60

.01

—- . 0 1

2.29

IO3

94

—.14

-.08

76

71

2-15 1.27

2.21

1.44

1.76

.32

1918

1.17

43

1.90

49

1-47 1.70

1.60

1919

Si 46

—•17 •30

1.79

—.20

1920

2.17

57

53

1.83

1921

1.91 1.66

54 53

1-79 1.69

1922 1923 1924 192S 1926 1927

-•03 .10 .03

•43 —- . 1 1 -

-•34 -.12

1-74 1.82

49

1.63

.03 -.11

47

1.73

-.09

1.81

50

-.08

1-73 1.71

50

1-73 1.66

48

-.07

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

jg

S O U R C E S OF D A T A :

Consumption of alcohol: 1890-1910, George B. Wilson, op. cit., Journal of the Royal Statistical Society, January, 1912, p. 244; 1911-1927, The Alliance Year Book, 1930, p. 321, with beer and wine converted to the equivalent spirits of proof strength. For 1915-1918 population estimates are taken from the Brewers' Almanac, official estimates by the RegistrarsGeneral not being available. A l l figures for alcohol consumption e x pressed in gallons of proof strength (British p r o o f ) per capita. Death rates from alcoholism and cirrhosis of the liver: 1890-1909, George B. Wilson, op. cit., Journal of the Royal Statistical Society, January, 1912, p. 213; 1910-1920-a, computed from population estimates and from reports of the Registrars-General of England and Wales, Scotland and Ireland; 1911-1927-b, computed from population estimates and from reports of the Registrars-General of England and Wales, Scotland and Ireland. Rates are per million population. For both consumption of alcohol and death rates the figures since 1923 exclude the Irish Free State. Figures in column "a" are based on the old classification of deaths; those in column "b" on the new classification adopted in 1910. Consumption computed from the death rate: computed from the equations, x = 3.568 log y — 4.56 for the 1890-1920 period, and x = 3.245 log y — 3.79 for the 1910-1927 period.

are f o r the w a r years and the period of demobilization, f o r w h i c h the estimates of population are not very reliable. It m i g h t be supposed that the death rate f r o m cirrohsis of the liver, and perhaps alcoholism also, is affected by the causes underlying the general death rate; and theref o r e that the decline in the combined death rate f r o m these t w o diseases since 1890 is to be attributed to the decline in the general death rate rather than to the decline in the consumption

of

alcoholic

liquors.

This

hypothesis

has

been tested by using the method of multiple correlation; the combined death rate f r o m the t w o diseases being correlated w i t h both the consumption of alcohol per capita and the general death rate.

T h e resulting Beta coefficients

and coefficients of part determination are given in T a b l e

33-* 4

In this correlation the logarithm of the combined death rate from

THE

8o

ECONOMIC

RESULTS

OF

TABLE COEFFICIENTS

OF R E L A T I O N S H I P ALCOHOLISM

The death rate from alcoholism and cirrhosis of the liver related to T h e consumption

IN

AND

PROHIBITION

33

RESPECT

CIRRHOSIS

TO T H E OF

DEATH

THE

1890-1920 Coefficients of part determination

Beta coefficients

RATE

FIOM

LIVER

1910-1927 Coefficients of part determination

Beta coefficients

of

alcohol per capita

.

T h e g e n e r a l death rate

—

1.025

-772

.882

sfoj

.250

.168

.242

.688

SOURCES OF D A T A :

Death

rate

from

alcoholism

and

cirrhosis

of

the

liver:

same

as

T a b l e 32, supra, p. 79. C o n s u m p t i o n of alcohol per c a p i t a : same as T a b l e 32, supra, p. 79. T h e g e n e r a l death rate : Statistical

Abstract

of the

United

Kingdom.

B e t a coefficients and coefficients of p a r t determination : c o m p u t e d b y means of the f o r m u l a s g i v e n by E z e k i e l , op. cit., pp. 182-184.

T h e s e coefficients indicate that both f o r the period 18901920 and the period 1 9 1 0 - 1 9 2 7 variations in the death rate f r o m alcoholism and cirrhosis of the liver are accounted for

very

largely

by

variations

in

the

consumption

of

alcohol, and to a much smaller degree by variations in the general death rate. T h i s conclusion is supported by

the

fact that the coefficient o f multiple determination in respect to these t w o independent variables is only slightly greater than the coefficient of determination in respect to the consumption o f alcohol alone : .968 compared with .964 f o r the period f r o m 1890 to 1920, and .973 compared w i t h the t w o diseases w a s

considered the dependent v a r i a b l e , and the

sumption of alcohol per capita and the l o g a r i t h m of the general rate considered absolute

independent v a r i a b l e s .

changes

in

the

consumption

That of

is, it

alcohol

was

are

condeath

assumed

accompanied

that by

percentage c h a n g e s in the death rate f r o m alcoholism and cirrhosis of the liver, but that

percentage

changes

accompanied by p e r c e n t a g e c h a n g e s and

cirrhosis

coefficients and pp. 181-185.

of

the

liver.

For

in the

general

death rate

in the death rate f r o m the

statistical

coefficients of p a r t determination,

are

alcoholism

significance

of

see E z e k i e l , op.

Beta cit.,

CONSUMPTION

ESTIMATE

FROM DEATH

.886 f o r the p e r i o d f r o m 1 9 1 0 t o 1 9 2 7 . 5

RATES

81

T h a t is, f o r the

p e r i o d f r o m 1 8 9 0 t o 1 9 2 0 , 9 6 . 4 per cent, o f the v a r i a t i o n s in the death r a t e f r o m a l c o h o l i s m a n d c i r r h o s i s o f the liver are accounted f o r b y v a r i a t i o n s in the c o n s u m p t i o n o f

alcohol,

b u t 96.8 per cent, o f s u c h deaths are accounted f o r w h e n v a r i a t i o n s in the g e n e r a l death rate are also considered a c a u s e ; and f o r the p e r i o d f r o m 1 9 1 0 t o 1 9 2 7 , 88.6 per cent, o f the v a r i a t i o n s in the death rate f r o m a l c o h o l i s m a n d c i r r hosis o f the l i v e r a r e a c c o u n t e d f o r b y v a r i a t i o n s in the cons u m p t i o n o f alcohol, a n d 9 6 . 4 p e r cent a c c o u n t e d f o r b o t h by v a r i a t i o n s in alcohol c o n s u m p t i o n a n d v a r i a t i o n s in t h e g e n e r a l d e a t h rate. ALCOHOL

CONSUMPTION' IN

For

Denmark

annual

AND T H E DEATH

RATE

DENMARK

figures

of

alcohol

consumption

and o f deaths f r o m a l c o h o l i s m a n d f r o m c i r r h o s i s o f liver

are

available

for

the

period

since

the

1911.9

The

coefficient o f c o r r e l a t i o n b e t w e e n a l c o h o l c o n s u m p t i o n a n d deaths

from

these c a u s e s

f o r the p e r i o d

from

1911

to

1 9 2 7 is . 9 6 7 w i t h n o l a g , and .944 w i t h a l a g o f one y e a r in the death rate.

I t w i l l be noted that the closer c o r r e l a t i o n

in this case is w i t h n o l a g in the death rate, w h i l e in G r e a t B r i t a i n the closer c o r r e l a t i o n is w i t h a l a g o f a y e a r in the death rate.

T h i s is e x p l a i n e d by the f a c t that in D e n m a r k ,

f o r m o s t o f the y e a r s b e t w e e n 1 9 1 1 a n d 1 9 2 7 , the death rate 5

All

these coefficients of

number of 0

Annual

d e t e r m i n a t i o n h a v e been a d j u s t e d

figures

the

c a n doubtless be obtained f o r a m u c h l o n g e r period

than this, since the s o u r c e s consulted g a v e back t o

for

observations.

1891

in the

case of deaths.

case of alcohol

While

the

reliability

figures

consumption of

of

five-year

and to

the coefficient of

averages

1876 in the correlation

increases w i t h the n u m b e r of cases, the coefficient f o r the period since 1911 is s o h i g h a n d

its s t a n d a r d e r r o r so small that additional

cases

w o u l d not appreciably increase the a c c u r a c y of the correlation coefficient o r of estimates m a d e f r o m the r e g r e s s i o n

equations.

82

THE ECONOMIC

RESULTS

OF

PROHIBITION

f r o m alcoholism is somewhat greater than that f r o m cirrhosis of the liver, while in the United K i n g d o m the death rate f r o m cirrhosis is much greater than that f r o m alcoholism. T h e equations of relationship, with no lag in the death rate, are log y =

.14X

+

1.38,

and x =

6.66

log y —

8.93

where y is the death rate f r o m alcoholism and cirrhosis of the liver, and x is the per capita consumption of p u r e alcohol in liters. T h e data f o r this analysis, together with the estimates of consumption of alcohol derived f r o m the equation of relationship, are given in Table 34. TABLE

34

CONSUMPTION OF ALCOHOL AND THE ALCOHOLIC DEATH RATE IN DENMARK

YEAR 1911 I9I2 1913 1914 19I5 1916

CONSUMPTION OF ALCOHOL X

7.18 6.50 6.12 6.16 6.23 6.68

1917 1918 I9I9

3-3S 1.67 2.52

1920 I92I

303 2.66 2.60

1922 1923 1924

2.81

1925 1926

2.88 2.86 2.66

1927

2.46

DEATH RATE FROM ALCOHOLISM CONSUMPTION AND CIRRHOSIS COMPUTED OF THE LIVER FROM THE DEATH RATES y 6.96 243 211 6.55 5.84 165 182 6.12 166 206 "3 54 57 62

DEVIATIONS FROM ORIGINAL ESTIMATE OF CONSUMPTION —.22 •05 —.28 — 04

5.86

—•37 —.20

6.48 4-74 2.61

1-39

2.76

•94

SI

2-45

•24 —•03 —.21

51 51 50

2-43 2.45

—.»5 —36

2-39 2.61

—•49 —•25

2.39

—.27 —.07

54 50 50

SOURCES OF DATA : Consumption of alcohol: Department of F i g u r e s in liters of pure alcohol per capita.

300

239 Statistics

of

Denmark.

CONSUMPTION

ESTIMATE

FROM DEATH

RATES

83

Death rate from alcoholism and cirrhosis: Department of Statistics of Denmark. Figures are per million inhabitants, and refer to the urban population of Denmark. Consumption computed from the death rate: computed from the equation, x = 6.66 log y — 8.93.

It m a y be noted that the only t w o y e a r s in which the estimate of consumption of alcohol derived f r o m the death rate d i f f e r s appreciably f r o m the original estimate of consumption are the w a r years, 1 9 1 7 and 1 9 1 8 .

T h e reason

f o r these deviations is doubtless the f a c t that d u r i n g those y e a r s the consumption of alcohol w a s rapidly

declining,

with a lag in the decline in the death rate f r o m alcoholism and cirrhosis of the liver. 7 D u r i n g this period the general death rate fell steadily and as in the case of the United K i n g d o m , it m i g h t be supposed that a part of the reduction in the death rate f r o m alcoholism and cirrhosis of

the liver is associated

with that decline rather than with the reduction in alcohol consumption.

When

multiple

correlation

is

applied

to

these variates, the coefficient of multiple determination is .970, only slightly greater than the coefficient of determination with respect to the consumption of alcohol alone, which is .935.

T h e Beta coefficient with respect to the consump-

tion of alcohol is .852 and with respect to the general death rate . 3 6 8 ; while the coefficient of part determination with respect to the consumption of alcohol is .961 and with respect to the general death rate .820.

J u s t as in the United K i n g -

dom, the death rate f r o m alcoholism and cirrhosis of the 7

Since the above calculations were made, data have been made available for the years 1928 and 1929. T h e consumption of alcohol estimated from the death rate was 2.55 and 2.76 liters per capita for these years, respectively, compared with 2.33 and 2.58 liters reported by the Department of Statistics. The errors of estimates are thus .22 and .18 liters, indicating that the equation of relationship holds for these years as well as for the years from which it is derived.

THE ECONOMIC

84

RESULTS

OF

PROHIBITION

liver is m o r e closely related to the c o n s u m p t i o n o f alcohol than to the f o r c e s u n d e r l y i n g the g e n e r a l d e a t h rate. 8 ALCOHOL CONSUMPTION AND T H E DEATH RATE IN T H E UNITED STATES

T h e type a n d d e g r e e o f relationship b e t w e e n deaths a n d the c o n s u m p t i o n o f alcohol s h o w n by statistical

analyses

to exist in the U n i t e d K i n g d o m a n d in D e n m a r k are a l s o revealed in the U n i t e d S t a t e s despite c e r t a i n in the statistics. ficient

Records

for two reasons:

in the U n i t e d

first,

d e a t h rates

inadequacies

S t a t e s are from

de-

alcohol-

ism a n d f r o m cirrhosis o f the l i v e r are available only f o r the registration a r e a o f the U n i t e d S t a t e s w h i c h v a r i e s in extent

f r o m y e a r to y e a r a n d d o e s n o t y e t include

entire U n i t e d States.

the

S e c o n d , estimates o f per capita con-

sumption o f A m e r i c a n - m a d e w i n e a r e in reality estimates o f production, and doubtless are m o r e v a r i a b l e f r o m y e a r to y e a r than the actual

consumption.

B e c a u s e o f the c h a n g i n g e x t e n t o f the r e g i s t r a t i o n a r e a it is desirable to use death rates in the r e g i s t r a t i o n states of

1900 or in the r e g i s t r a t i o n states o f

tion w i t h the c o n s u m p t i o n of alcohol.

1 9 1 0 f o r correla-

I f the f o r m e r area,

w h i c h c o v e r s 11 states w i t h 40 per cent, o f the population, is used, the coefficient o f c o r r e l a t i o n f o r the t w e n t y y e a r s f r o m 1900 to 1 9 1 9 , between the c o n s u m p t i o n o f

alcohol

and the combined death rate f r o m a l c o h o l i s m and cirrhosis 6 In making this analysis it was assumed that any cause resulting in a certain percentage change in the general death rate would result in a percentage change in the death rate from alcoholism and cirrhosis of the liver, but that absolute changes in the consumption of alcohol result in percentage changes in the death rate f r o m these two diseases. T h a t is, the logarithms of the death rate f r o m alcoholism and cirrhosis of the liver, as the dependent variable, were correlated with the consumption of alcohol in liters per capita and the logarithms of the general death rate as independent variables.

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

85

of the liver, is .937. I f the latter area, covering 2 1 states and 58 per cent, of the population is used, the corresponding coefficient of correlation f o r the ten-year period from 1 9 1 0 to 1 9 1 9 is .966. In both cases the type of relationship is the same as in Great Britain and in Denmark : that is, the logarithm of the death rate is a linear function of the per capita consumption of alcohol. Other coefficients of correlation between the consumption of alcoholic liquors and death rates f r o m alcoholism and cirrhosis of the liver are given in Table 35. TABLE ALCOHOLIC

DEATHS

AS

RELATED

UNITED

TO

STATES,

35 ALCOHOL 1 9 1 0 TO

Correlation between Consumption Death rate of from

Spirits Spirits Spirits Beer Beer Beer Alcohol Alcohol Alcohol

alcoholism cirrhosis of the liver both causes alcoholism cirrhosis of the liver both causes alcoholism cirrhosis of the liver both causes

CONSUMPTION

IN

THE

1919 Correlation coefficient

915 880 921 903 976 954 931 963 966

SOURCES OF D A T A :

Statistics of consumption: Table I, supra, p. 24. Statistics of deaths : Bureau of the Census, rates for the Registration States of 1910^. Correlation coefficients : computed by the usual method for linear correlation, using the logarithms of the death rates.

A s noted in the case of the United Kingdom, there is a tendency f o r the consumption of beer and of spirits to v a r y together, and this may introduce a spurious correlation when they are separately related to the death rates; so that the most significant of these coefficients is that between the consumption of alcohol and the death rate

86

THE ECONOMIC

RESULTS

OF

PROHIBITION

f r o m both alcoholism and cirrhosis of the liver.

In this

case the equations of relationship are log y = x =

.029 x +

2 . 1 9 1 , and

3 . 2 2 9 log y — 5 . 7 2 4

where v is the death rate f r o m alcoholism and cirrhosis of the liver per million population, and x is the consumption of alcohol in gallons per capita. that the death rates statistics J u n e 30.

of

are

I t should be noted

f o r calendar y e a r s , while

consumption

relate to

fiscal

years

the

ending

T h i s makes a half-year lag in the death rates.

T h e data f o r this analysis, and the estimates of sumption of

alcohol derived

f r o m the death rate

confrom

alcoholism and cirrhosis of the liver are given in T a b l e 36. T A B L E CONSUMPTION*

OF A L C O H O L

IN

THE

Year

I9IO

AND T H E

UNITED

Alcohol consumption, gallons per capita. y e a r s endi n g J u n e 30 X

36

STATES,

Death rate f r o m alcoholism and cirrhosis per m i l l i o n population, calendar years

ALCOHOLIC 1910

TO

DEATH

RATE

1919

Consumption computed from the death rate

Deviations from the original estimate

I.62

—.02 —.06

y

I9TI

1.70

188 191

1912

1.66

186

I.64 I.6i

1913

197

1.68

— 03

IQ'4

1.71 1.67

185

1.60

—.07

1915

1.46

175

1-52

.06

1916

I

196

1.68

• T7

!9I7

1.64

185

1.60

— 04

1918

1.13

137

1.18

•05

1919

.80

103

-78

—.02

I.64

-5I

— 05

S O U R C E S OF D A T A :

Consumption of alcohol:

Table 1, supra, p. 24.

Death rate fi om alcoholism and cirrhosis of the l i v e r : B u r e a u of the Census.

R a t e s are f o r the registration area of 1910.

Consumption

computed

from

equation, x = 3.229 l o g y — 5-724-

the

death

rate:

computed

from

the

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

87

The standard error of estimate, adjusted for the number of observations, of the consumption computed from the death rate is ± .06. The coefficient of correlation, similarly adjusted, between the death rate and the consumption of alcohol, is .961. The probability of obtaining by chance an adjusted coefficient of correlation as high as .961, even with so small a sample as 10 cases, is exceedingly small. 9 In the phraseology of statistics, the equation derived above may be considered a reliable method of estimating the consumption of alcohol, provided all the observations of death rates are drawn from the same universe as those used in deriving the equation. If we assume that observations of death rates since 1919 are drawn f r o m the same universe as those from 1910 to 1919, we can use the equation of relationship given above to estimate the consumption of alcohol in the United States since 1919. In this case, the phrase "drawn from the same universe" is simply the assumption that alcoholic beverages consumed since the adoption of prohibition have the same effect on the death rate as those consumed before the adoption of prohibition. This assumption may not, of course, be valid, and there is no way of determining the degree of its validity. There are a number of reasons why it may be supposed that the relationship between the consumption of alcoholic beverages and death rates from alcoholism and cirrhosis of the liver has been changed by the advent of prohibition. The quality of liquor and the presence of other ingredients than alcohol may be in part responsible for the effect 9 This is based on the value of /, which is 10.5. T h e letter t is used t o designate an equation developed by R. A . Fisher to judge the probability of the occurrence of correlation coefficients by chance. F o r its exact significance readers are referred to Ezekiel, Methods of Correlation Analysis, pp. 20 and 256, or to R. A . Fisher, Statistical Methods for Research Workers, pp. 159-162.

88

THE

which

those liquors have on the death rate, and

ECONOMIC

RESULTS

OF

PROHIBITION

those

other ingredients m a y be present in different proportions in the liquors sold' under prohibition than in those before

prohibition.

The

quality

of

alcoholic

sold

beverages

sold u n d e r prohibition is doubtless in l a r g e part inferior, but so w a s that sold prior to prohibition. 1 0

Then

f a c t that annual changes in the consumption of beverages

were

commonly

not

very

great

the

alcoholic

may

conceal

an effect on the death rate w h i c h is delayed m o r e than the h a l f - y e a r assumed in the analysis.

I f this is the case, the

estimates of consumption d u r i n g the early y e a r s of

pro-

hibition w o u l d not show as m u c h curtailment as actually occurred, nor w o u l d a later rise in consumption vealed as promptly as it actually occurred. effects o f

alcoholic beverages m a y

be re-

Further, the

depend, and in some

respects are k n o w n to depend, on the percentage of alcohol in the solution drunk.

T h e adoption o f prohibition has

necessarily produced c h a n g e s in the d r i n k i n g habits of the people.

It m a y be a r g u e d on the one hand that

since

alcoholic b e v e r a g e s are n o w legally contraband, fhey will be sold, and hence consumed, in the most condensed and h a r m f u l f o r m s ; and on the other, that alcoholic beverages are n o w consumed at h o m e rather than at saloons, and probably

used

in

more

dilute

forms.

It

may

argued that in recent years there has been less and misery

also

be

industrial

drinking, and more convivial drinking,

than

in p r e - w a r y e a r s ; and that convivial d r i n k i n g is less likely than misery and industrial d r i n k i n g to result in alcoholism. 1 1 10

It m a y

further be argued, w i t h o u t any basis f o r

B e r t P a r k , " T h e Bootlegger and H i s Forerunners," The

Mercury, perance—or

July,

1926; and T h e

Prohibition,

American

H e a r s t Temperance Committee,

Tem-

pp. 14-15-

T h a t convivial drinking has less influence on alcoholism than other types of drinking appears to be borne out by statistics in Stockholm. I n that city alcoholism decreases during the winter, and drunkenness 11

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

gg

j u d g i n g the merit of the argument, that the distribution of alcohol consumption about the per capita average has been different since prohibition f r o m what it was before, and that, if drinking is more or less concentrated among certain sections or age-groups of the population than it was in pre-prohibition years, the character of the relation between per capita consumption and death rates may have changed." These considerations should be kept in mind in connection with the estimates in Table 37 of the consumption of alcohol since 1919, derived from the equation of relationship used in the preceding table. TABLE CONSUMPTION

OF ALCOHOL ESTIMATED

Death rate from alcoholism and cirrhosis per million population, (calendar years)

Year

37

IN THE UNITED

FROM THE

DEATH

STATES,

1920-1931,

RATE

Consumption of alcohol computed from the death rate, gallons per capita, ( y e a r s ending J u n e 3 0 )

Consumption of alcohol, gallons per capita (calendar years)

•55

.64

.58

.70

.46

.82

.82

.76

.88

.64

i.00

P r o b a b l e limits of alcohol consumption, (calendar y e a r s ) a b

1920

88

1921

99

1922

109

.89

.92

.86

.98

•74

1.10

1923

" 7

•95

•97

•91

I.03

•79

1-15

1924

119

.98

1.02

.96

I.08

.84

1.20

1925

125

1.05

1.07

1.01

113

.89

1.28

1926

128

I.08

1.11

i.05

1.17

•93

1.29

1927

133

I.I3

1-15

1.09

1.21

•97

1-33

1928

136

i.i

7

1.07

1.19

.95

1.31

1929

129

1.09

1-13 1.09

1.03

I.IS

•91

1.27

1930

128

1.08

1.09

1.03

IIS

.91

1.27

1931

130

1.10

drops during the Christmas season, despite a decidcd increase in the consumption of alcohol during the holidays hibition 12

im Norden,

(Gunter Schmolders,

Pro-

p. 95).

It is also possible that death rates are less reliably

recorded in

recent years, on account of the unwillingness of physicians to c e r t i f y deaths as due to alcoholism.

H o w e v e r , any tendency of this sort has

probably been offset by a general tendency in recent years toward greater accuracy in reporting the causes of death.

9°

THE ECONOMIC

RESULTS

OF

PROHIBITION

SOURCES OF D A T A :

Death rate f r o m alcoholism and cirrhosis of the l i v e r : 1920-1929, B u r e a u of the C e n s u s ; 1 9 3 0 - 1 9 3 1 , estimated f r o m the rate among the industrial policy holders of the Metropolitan L i f e Insurance Co. Rates r e f e r to the Registration States of 1910. Consumption of alcohol computed from the death r a t e : computed f r o m the equation, x = 3.229 log y — 5.724. Consumption of alcohol, calendar y e a r s : a v e r a g e of successive years.

fiscal

Probable limits of consumption of alcohol: derived f r o m the preceding column by subtracting and adding ( a ) the standard error of estimate, and ( b ) three times the standard error. T h e r e is about one chance in three that the consumption f o r any one year is greater or less than the limits given in ( a ) , and about one chance in 62 that the consumption f o r any one y e a r is greater or less than the limits given in ( b ) . T A B L E

38

D E A T H R A T E S IN T H E UNITED Death rate f r o m alcoholism p e r million population

1910 1911

55

133

52

1912

55 63

139 131

1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929

53 47

66 63 34 19 12

STATES

Death rate from cirrhosis of t h e l i v e r per m i l l i o n population

134 132 128 130 122 103 84

General death rate p e r 10,000 population

150 142 139 141 136 136 140 143 181 129

76

130 116

48

79 79 78 80 80 80

50

83

20 30 39 39 45

50

86

47

82

i '7 122 117 118 123 114 121 119

SOURCE OF D A T A :

B u r e a u of the Census.

Rates f o r alcoholism and cirrhosis of the liver

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

gi

r e f e r to the R e g i s t r a t i o n S t a t e s of 1910, and the general death rate to the entire r e g i s t r a t i o n a r e a .

To

find,

if

possible,

the relative influence of

wine, beer and the causes underlying the general

spirits, death

rate upon the death rates f r o m alcoholism and f r o m cirrhosis of the liver, the method of multiple correlation has been used.

T h a t is, the logarithms of the death rate f r o m

alcoholism and of the death rate f r o m cirrhosis of

the

liver w e r e separately correlated w i t h the f o u r independent variables : the consumption of spirits, the consumption of beer, the consumption of wine, and the logarithms of the general death rate. are g i v e n

T h e death rates used in these analyses

in T a b l e 38, and the results of the analyses,

expressed in partial regression coefficients and coefficients of part determination, in T a b l e 39. TABLE MEASURES

OF

RELATIONSHIP

LIVER, THE G E N E R A L ALCOHOLIC

BETWEEN

DEATH

3g CIRRHOSIS

OF

R A T E AND THE CONSUMPTION

ALCOHOLISM,

OF

BEVERAGES, U N I T E D Coefficients of partial regression

D e a t h rate f r o m correlated

STATES,

THE

1910-1919

Coefficients of part determination

Coefficients of multiple determination

alcoholism

with

T h e c o n s u m p t i o n of spirits

.968 ± .350

.839

T h e c o n s u m p t i o n of beer

.030 ± .025

.489

T h e consumption of w i n e

— . 5 4 6 ± .404

.182

.813 ± .539

.278

T h e g e n e r a l d e a t h rate

.879

D e a t h r a t e f r o m cirrhosis of the liver correlated

with

T h e consumption of spirits

.018 ± . 1 1 7

.018

T h e consumption of beer

.038 ± .008

•943

T h e c o n s u m p t i o n of w i n e

—.002 ± .136

.00002

T h e g e n e r a l death rate

— . 1 6 1 ± .182

• 137

•933

S O U R C E S OF D A T A :

D e a t h r a t e s and consumption of alcoholic liquors : same as T a b l e 37, supra. Coefficients : c o m p u t e d by methods g i v e n in E z e k i e l , op. cit.,

passim.

THE ECONOMIC

RESULTS

OF

Coefficients of multiple determination number of observations and variables.

have

92

PROHIBITION been corrected

for

the

T h e coefficients of partial regression in the above table are computed so as to s h o w , in the case of the consumption of alcoholic beverages, the percentage change in the death rate f r o m alcoholism o r cirrhosis of the liver accomp a n y i n g a change of . 0 1 gallon per capita in the consumption of spirits, beer o r w i n e ; and in the case of the general death rate, the percentage change in the death rate f r o m alcoholism o r cirrhosis of the liver accompanying a change of one per cent, in the general death rate. of

T h e coefficients

part determination measure the proportion of

varia-

tions in the death rate f r o m alcoholism or cirrhosis of the liver accounted f o r by variations in the consumption of spirits, beer or wine, or the general death rate. efficients of

multiple

determination

give

the

T h e cototal

per-

centage of the variations in the death rates f r o m each of these diseases accounted f o r by variations in all f o u r of the other factors. T h e standard e r r o r s of the partial regression coefficients, however, are so l a r g e that g r e a t caution must be used in interpreting their significance.

T h i s is because there is a

high correlation between the consumption of spirits and that of beer, and some of the effects of one type of beverage m a y be allocated, statistically, to the other; because the death rates f r o m alcoholism and cirrhosis m a y in part be the joint effect of consumption of both kinds of l i q u o r ; and because the data c o v e r only the short period of ten years.13 13

In

fact, the only

relationships

shown

by

this

It may be noted also that the validity of these coefficients of partial regression, and of the coefficients of determination in this and previous tables, depends on whether we are considering the ten years from 1910 to 1919, or are considering their applicability to other years. S o f a r as this one decade is concerned, the sample consists of the

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

93

table to be important are those between the consumption of spirits and the death rate f r o m alcoholism and between the consumption of beer and the death rate f r o m cirrhosis of the liver. A n increase or decrease of one-tenth of a gallon per capita in the consumption of spirits w a s accompanied during the decade from 1 9 1 0 to 1 9 1 9 , according to the regression

coefficient, by an increase or decrease,

respec-

entire universe. F o r this decade, therefore, the standard e r r o r s are meaningless in respect to their p r i m a r y purpose of s h o w i n g w h a t coefficients might be obtained f r o m other samples d r a w n f r o m the same universe. B u t w e know that the data are subject to chance errors of reporting, and probably also to biased errors. T h a t is, w h i l e the sample consists of the entire universe, it is a distorted picture of that universe. I f we assume that the d i f f e r e n c e between the true univ e r s e and the description of that universe given by the data is no greater than the difference between a random sample and the universe f r o m which the sample is drawn, standard e r r o r s m a y be used to indicate the reliability of coefficients as descriptions of the true relations between the variables involved. B u t if w e apply the results obtained f o r the decade 1 9 1 0 to 1 9 1 9 to other years, we are assuming that that decade is a random sample of the universe consisting of all the y e a r s under consideration. In the present case we would like to apply the results to another decade, so that the total universe consists of 20 or 2 1 years. T e n y e a r s constitute half the universe, which is a relatively large, though an absolutely small sample. It is not, however, a random sample, since all the data are drawn f r o m one section of the universe. If w e assume that the l a r g e relative size of the sample increases the reliability of the coefficients of relationship as much as the f a c t that it is a 'spot" sample decreases such reliability, we m a y use the computed standard e r r o r s as measures of the reliability of those coefficients when applied to the rest of the u n i v e r s e : that is, to y e a r s in the second decade, 1920 to 1930. These considerations are apart f r o m the possibility previously discussed (supra, p. 87) that the last decade b e f o r e prohibition and the first decade after prohibition should not be considered parts of the same universe, on the ground that alcoholic beverages consumed since the adoption of prohibition do not have the same effects as those consumed before prohibition.

94

THE

ECONOMIC

RESULTS

OF

PROHIBITION

tively, of 9.7 per cent, in the death rate f r o m alcoholism. There is about one chance in three, however, that the true change in the death rate f r o m alcoholism per tenth of a gallon change in per capita consumption was only 6.2 per cent., and one chance in three that it was as high as 1 3 . 2 per cent. There is about one chance in 3 5 that this regression coefficient has no meaning whatsoever, and that there is no relationship of the type assumed between the per capita consumption of spirits and the death rate f r o m alcoholism. 1 * However, the coefficient of part determination indicates that 84 per cent, of the variations in the death rate f r o m alcoholism not accounted f o r by the other three factors are accounted f o r by variations in the consumption of spirits. A n increase or decrease of one gallon per capita in the consumption of beer was accompanied, during this decade, by an increase or decrease, respectively, of 3.8 per cent, in the death rate f r o m cirrhosis of the liver. However, there is one chance in three that the true change was only 3 per cent, or as great as 4.6 per cent., and one chance in 2 5 0 that there was no true relationship. T h e coefficient of part determination shows that variations in the consumption of beer accounted f o r 94 per cent, of the variations in the death rate f r o m cirrhosis of the liver not accounted f o r by the other factors. W e may also assume that the relative size of the regression coefficients gives some idea of the relative effect of the various liquors upon deaths f r o m these two causes. Neglecting the standard errors, they indicate that a gallon of beer, though averaging about one-twelfth the alcoholic 14 This, and other expressions in this chapter, regarding the probability that the observed relationships might be due to chance are based on the table regarding the reliability of constants computed from small samples given in Ezekiel, Methods of Correlation Analysis, p. 20.

CONSUMPTION

ESTIMATE

FROM DEATH RATES

95

strength of a gallon of proof spirits, has only about V53 as much effect on the death rate f r o m alcoholism and i l / 2 times as much effect on the death rate f r o m cirrhosis, as a gallon of

proof

spirits. 1 5

T h e consumption of

wine

appears to have no measurable effect on the death rate f r o m cirrhosis of the liver, and a slight tendency to decrease the death rate f r o m alcoholism.

T h e latter effect

m a y be explained on the theory that when A m e r i c a n production of wine is large, the price is low, consumers drink w i n e instead of spirits, and do not so frequently become victims of alcoholism; or it m a y be considered a chance relationship, f o r there is one chance out of five that the true relationship is zero. T h e death rate f r o m alcoholism seems also to be somew h a t related to the general death rate, since a change of one per cent, in the general death rate is accompanied by a corresponding change of .8 per cent, in the death rate f r o m alcoholism : though this conclusion is not v e r y reliable, there being one chance in three that the change in the death rate f r o m alcoholism is only .5 per cent or as g r e a t as 1 . 3 per cent., and about one chance in five that there is no relationship at all.

T h e death rate f r o m cirrhosis

of the liver is probably not related at all to the general death rate, since the standard error of the regression coefficient is larger than that coefficient, and both are small. B u t , h o w e v e r unreliable the coefficients of partial regression m a y

be, the coefficients of

multiple

determination

show that variations in the f o u r factors listed in Table 3 9 account f o r 88 per cent, of the variations in the death rate f r o m alcoholism and 93 per cent, of the variations 15

The size of the standard errors of these partial regression coefficients and the values obtained for t (cf. footnote 8, supra, p. 87) indicate that this statement of the relative effects of spirits and of beer is not very reliable.

96

THE

ECONOMIC

RESULTS

in the d e a t h r a t e f r o m c i r r h o s i s o f efficients a r e h i g h e n o u g h

PROHIBITION

OF

the liver.

These

co-

f o r the r e g r e s s i o n e q u a t i o n s

be a p p l i e d t o d a t a o t h e r t h a n t h a t included in the

to

sample

a n a l y z e d , w i t h a h i g h d e g r e e o f c o n f i d e n c e in the a p p r o x i m a t e accuracy of estimates derived t h e r e f r o m . 1 8 These as

regression

equations

in t h e i r c o m p l e t e

form

are

follows: yi

=

.42053X +

.012942 —

.23692W

V2

:

.00774X +

.01646Z —

.00068w —

+

.813031,

and

,i6o62t

where y i is the deviation from the 1910-19 mean of the logarithm of the death rate from alcoholism per million population, y2 is the deviation from the 1910-19 mean of the logarithm of the death rate from cirrhosis of the liver per million population, x is the deviation from the 1910-19 mean consumption of spirits in gallons per capita, z is the deviation from the 1910-19 mean consumption of beer in gallons per capita, w is the deviation from the 1910-19 mean consumption of wine in gallons per capita, and t is the deviation from the 1910-19 mean of the logarithm of the general death rate per thousand population. 17 T o e s t i m a t e the c o n s u m p t i o n o f beverage

use

may

be m a d e

of

the

each kind of corresponding

alcoholic regres-

sion e q u a t i o n s : 10 " I f the regression equation is to be used solely as a basis for making new estimates of the values of the dependent factor to be expected for given values of the independent factors, then it does not make such a great difference as to the accuracy of the several regression coefficients. Any deficiency in one will tend to be compensated for by an excess in another, and the whole set will provide estimates of the accuracy indicated by the standard error of estimate." Ezekiel, op. cit., p. 261. A s noted above, this is true only on the assumption that the " other " data are drawn from the same universe as those in the sample. 17 The regression coefficients in these equations differ f r o m those in Table 39, supra, p. 91, because in that table they have been converted to the basis of natural logarithms and expressed in percentages.

CONSUMPTION

ESTIMATE

FROM

DEATH

RATES

x =

1.415 y i +

.436 y 2 —

1.8451

z =

.256 y i +

56-823 y2 +

io.279t

gy

with all the terms having the same meaning as before. 1 8 In Table 40 these equations have been used to estimate the consumption of spirits and the consumption of beer f o r the years from 1910 to 1919, so that they may be compared with the original estimates derived f r o m tax reports. It will be noted that there is very little difference in the estimates f o r most years. T A B L E ESTIMATES

OF

THE

CONSUMPTION DERIVED

OF

FROM

SPIRITS

DEATH

( g a l l o n s per Consumption of spirits Estimate Estimate from the from tax death rates records Difference

Year ending J u n e 30

40 AND

OF

BEER,

1910-1919,

RATES

capita) Consumption of beer Estimate Estimate from the from tax death rates records Difference 20.2S .48 19-77

1910

1.38

1.42

I9II 1912

I.40

146

—.06

21.08

20.69

•39

I.44

I-45

—.01

19-53

20.02

— -49

.00

19.60

20.72

—T.12

1.44

.00

19.62

20.69

1.07

1915

I.5I 1.44 1.28

1.26

.02

18.84

18.40

•44

1916

i-54

1-37

• 17

19-39

17.78

1.61

1913 1914

—.04

1917

149

1.62

—•13

17.92

18.17

—•25

1918

.89

.85

.04

14.72

14.87

1919

.76

•77

8.11

8.00

—•IS .11

SOURCES

OF

Estimates

—.01

DATA:

from

the

death

rates:

computed

from

x = 1.415V, + , 4 3 6 y 2 — i . 8 4 5 t and z = .2s6y 1 + 56.823y 2 + Estimates f r o m t a x r e c o r d s : T a b l e 1, supra,

the

equations

io.279t.

p. 24.

The standard error of estimate, for the estimates derived from death rates, is .07 gallons per capita in the case of spirits and .77 gallons per capita in the case of 18

N o equation has been derived f o r wine, since w i n e appears to h a v e

no significant connection with death rates f r o m alcoholism and c i r r h o s i s of the

liver.

g8

THE ECONOMIC

RESULTS

OF

PROHIBITION

beer. But in applying these equations to other years than those f r o m 1 9 1 0 to 1 9 1 9 , these standard errors should be corrected f o r the number of observations and variables. When this is done, they are .09 gallons per capita in the case of spirits and .99 gallons per capita in the case of beer. These standard errors should be kept in mind in interpreting the estimates in Table 4 1 , in which the above equations are applied to the years since the adoption of prohibition. Furthermore, the pre-prohibition tendency f o r the consumption of spirits and that of beer to fluctuate together may result in making the estimates f o r one type of beverage too large and f o r the other too small. This is especially true i f , as is very probable, weak solutions of spirits have under prohibition been substituted f o r beer. T A B L E ESTIMATES

OF

CONSUMPTION DERIVED

OF

FROM

(gallons Year ending J u n e 30

41

SPIRITS DEATH per

Spirit«

AND

OF

BEER,

1920-1929,

RATES

capita)

Beer

1920

-45

1921

.87

5-63 6.13

1922

I.OI

6.21

1923

1.23

6.12

19-24

1-27

6-55 6.61

1925

1.35

1926

1.36

6.80

¿ 9 27

M 5

7-37

1928

1.41

8.52

1929

1.38

7-26

S O U R C E S OF D A T A : S a m e a s T a b l e 4 0 , supra,

p. 9 7 .

C H A P T E R THE

CONSUMPTION

OF

UNDER ESTIMATE

FROM

F O U R ALCOHOLIC

BEVERAGES

PROHIBITION :

ARRESTS

FOR

DRUNKENNESS

One of the most conspicuous effects of the excessive use of alcoholic beverages is public drunkenness, and it may be presumed that there is some relationship between the number of persons arrested f o r intoxication and the T A B L E 42 CONSUMPTION OF SPIRITS AND CONVICTIONS FOR DRUNKENNESS ENGLAND AND WALES, 1 8 9 1 - 1 9 1 4 AND

1919-1928

Year

Consumption of spirits, gallons per capita

Convictions for drunkenness per 10,000 population

1891

.89

58

1908

1892

.90

53

1909

•75 .61

Year

Consumption of spirits, gallons per capita

Convie* tions for drunkenness per 10,000 population 52 46

.87

50

I9I0

.58

•85 .88

s^

1911

48

I9I2

•59 .58

.90

53

1897 1898

.91

54

I9I3 I9I4

•93

57

1919

•59 .42

1899 1900

•97

I920

.42

•99

59 56

I92I

•34

1901

.98

58

1922

1902

•94 .88

58

1923

•31 .29

63 62

I924

.29

1925 1926

.29

19

.26

1893 1894 1895 1896

1903 1904

•85 .81

I90S 1906

59 56

•79 .80

1907

55

44 46 49 50 48

•59

16 25 20 19 19 20

1927

.26

17 16

1928

•25

14

SOURCES OF DATA : The

Alliance

Year

Book,

1 9 3 1 , pp. 3 2 2 a n d 329.

99

IOO

THE ECONOMIC

RESULTS

OF

PROHIBITION

consumption of liquor. T h a t this is the case in E n g l a n d and Wales, where records of convictions f o r drunkenness and of the consumption of alcoholic spirits are available back to 1 8 9 1 , is obvious f r o m examination of the figures in Table 42. T h e coefficient of correlation between the consumption of spirits and the convictions f o r drunkenness f o r the period covered in this table is + . 9 6 3 . T h i s is sufficient to make it possible to estimate the consumption of spirits f r o m the convictions f o r drunkenness with a high degree of accuracy. Similar records are not available in the United States f o r a long enough period before the adoption of prohibition to determine the relation between public drunkenness and the consumption of alcoholic beverages with nearly as much confidence in the results as in England and Wales. There are no compilations in the United States of convictions f o r drunkenness, and those f o r arrests g o back only to 1 9 1 0 . F o r the decade f r o m 1 9 1 0 to 1 9 1 9 , however, arrests f o r drunkenness were very closely related both to the consumption of spirits and to the total consumption of pure alcohol. T h e coefficient of correlation between the arrests f o r drunkenness and the consumption of spirits, corrected f o r the number of observations, is + . 9 1 3 ; and that between arrests f o r drunkenness and the consumption of pure alcohol, similarly corrected, is + . 9 2 8 . T h e equations of relationship are xi = X2 = where x i

. 0 1 1 1 y — . 6 3 8 1 and .0127 y — -7417

is the consumption

of

spirits

in gallons per

capita,

X2 is the consumption of pure alcohol in gallons per capita, and y

is the number of arrests per

10,000 population in 383 cities

and towns.

In Table 43 there are given, f o r each year f r o m 1 9 1 0

CONSUMPTION

ESTIMATE

FROM

ARRESTS

IOI

to 1919, the arrests for drunkenness in 383 places, the consumption of spirits and of pure alcohol as estimated f r o m arrests, and the consumption as estimated from t a x records. TABLE ARRESTS FOR D R U N K E N N E S S

43

AND THE CONSUMPTION OF ALCOHOLIC

BEVERAGES, UNITED STATES,

Year

I9IO I9II 1912 1913 1914 1915 1916 1917 1918 1919

A r r e s t s for drunkenness p e r 10,000 population, 383 cities

y 175 179

C o n s u m p t i o n of s p i r i t s (gallons per capita) Estimate Estimate from from tax arrests records XI

185 191

I.30 1-35 1.42 1.48

1.44 1.46 1.48 1.48

187 182 192 180 138 102

1.44 1.38 1.49 1.37 •89 •49

1-35 1.32 1.50 I.24

1910-1919 C o n s u m p t i o n of alcohol

(gallons per capita)

Estimate from arrests

X2 I.48 1-53 1.6l 1.68 1.63 1-57 1.70 1.56

.81

1.01

•52

•55

Estimate from tax records

1.67 1.68 1.69 1.69 1-57 1.49 1.58 1.39 •97 •53

SOURCES OF D A T A :

Arrests for drunkenness: 1914 to 1919, computed by Mr. John C. Gebhart, Director of Research, Association Against the Prohibition Amendment, from figures collected by the Moderation League; 1910-1913, estimated from arrests in 514 places, reported by Mr. Robert E. Corradini, in U. S. Congress, Senate, Subcommittee of the Committee on the Judiciary, The National Prohibition Law, p. 1504. (The former of these two series, though referring to a smaller number of places, is used in preference to the latter, so far as available, because population estimates since 1920 are based on the 1930 as well as the 1920 census.) Estimates of t h j consumption of spirits and of pure alcohol from arrests for drunkenness: computed from the equations, x i = . o m y — .6381, and X2 = .oi27y — .7417. Estimates of the consumption of spirits and of pure alcohol from tax records: computed from Table I, supra, p. 24, by averaging successive fiscal years. Figures for spirits are given in proof gallons, and those for alcohol in gallons of pure alcohol.

T h e standard errors of the estimates of consumption, as

THE

102

ECONOMIC

RESULTS

OF

PROHIBITION

derived f r o m arrests for drunkenness in comparison with those derived f r o m tax records, are . 1 0 gallons f o r spirits and . 1 4 f o r pure alcohol. These standard errors of estimate are sufficiently small and the coefficients of correlation sufficiently high to permit the use of arrests f o r drunkenness since 1 9 2 0 as a means of estimating the consumption of spirits and of pure alcohol, provided it is assumed that arrests bear the same relation to the use of spirits and of alcohol that they did prior to the adoption of prohibition. If this assumption is made, there is about one chance in three that f o r any given year the estimates in Table 44 differ f r o m the actual consumption by as much as the standard errors of estimate, and about one chance in fifty that they differ f r o m the actual consumption by as much as three times the standard errors of estimate. T A B L E THF.

CONSUMPTION

OF

ESTIMATES

SPIRITS FROM

AND

ARRESTS

Arrests for drunkenness

per 10,000

population, 383 c i t i e s

Year

44 OF

PURE FOR

ALCOHOL,

1920

TO

1929;

DRUNKENNESS

E s t i m a t e of consumption o f spirits, proof gallons per capita

E s t i m a t e of consumption of pure alcohol, g a l l o n s per capita

1920 1921 192 2

71

•IS

.16

92

.38

•43

122

•72

1923

141

•93

.81 1.05

1924 1923 1926 1927 1928 1929 SOURCES

OF

141

•93

1.OS

142

•94

1.06

146

.98

1.11

149

1.02

1.15

157

1.10

1-25

151

1.04

1.18

DATA :

Same as Table 43, supra, p. 101.

It is not, however, reasonable to suppose that arrests

CONSUMPTION

ESTIMATE

FROM

ARRESTS

bear exactly the same relation to the use of spirits and of alcohol since the adoption of prohibition as before prohibition. On the one hand, it may be argued that under prohibition, especially during its early years, police have been more strict in making arrests, and that a larger proportion than formerly of persons appearing on the streets under the influence of liquor are arrested. 1 But on the other hand, when the sale of liquor is illegal and it cannot be obtained in public saloons, and when the police are more strict in arresting intoxicated persons, it is reasonable to suppose that drinking is less public and that fewer drunken persons appear on the streets relative to the quantity of liquor consumed. When drinking takes place largely at homes, clubs and speakeasies, it is probable that friends keep most of those intoxicated off the streets until they have had time to sober up. Because of these uncertainties, the estimates of the consumption of spirits and of alcohol derived f r o m arrests f o r drunkenness should be considered less reliable than those derived f r o m the sources of production or f r o m the death rates f r o m alcoholism and cirrhosis of the liver. 1 There are great variations in police severity regarding drunkenness in the various cities, and great changes of policy in some cities from time to time, both before and since prohibition. (Cf. John C. Gebhart, "Prohibition: Statistical Studies of Enforcement and Social Effects," Statistics in Social Studies, pp. 114-2S ) These differences are probably averaged out in the figures of arrests in 383 cities, except perhaps for a general increase in strictness during the early years of prohibition and a possible relaxation in recent years.

C H A P T E R THE

CONSUMPTION

OF

V

ALCOHOLIC

PROHIBITION : COMPARISON

OF

BEVERAGES

UNDER

ESTIMATES

In the foregoing chapters estimates have been made by three methods, completely independent of each other, of the consumption of alcoholic beverages since the adoption of prohibition. In Table 45 the results of these three methods in respect to the consumption of pure alcohol are brought together. T A B L E 45 ESTIMATES

OF THE CONSUMPTION OF PURE ALCOHOL IN THE UNITED STATES, 1920 TO 1 9 3 0

(gallons per capita)

Estimate from Estimate from sources of Estimate from arrests for production death rates drunkenness .16 — .64

Year 1920

Final estimate

Index of consumption of alcohol 1911-14 = 100

—

1921

.26

.82

•43

1922

.90

.92

.81

•54 •91

1923 1924

1.17

•97

105

1.07

1.08

1.02

1.05

1.05

53-8 63-3 62.1

1925 1926 1927

I-I3

1.07

1.06

1.10

65.1

1.24

1.11

1.18

69.8

1.08

1.15 I-I3

1.11 I-I5 1.25

1.12

66.3 69.8

1.09

1.18

1.20

71.0

I.06

62.7

1928 1929

1-23 I-3I

1930

1.03

1.09

I.;8

32.0

SOURCES OF DATA :

Estimate from sources of production: Table 30, supra, p. 72. Estimate from death rates: Table 37, supra, p. 89. Estimate from arrests for drunkenness : Table 44, supra, p. 102. Final estimate : average of the estimate from sources of production and the estimate from death rates. 104

COMPARISON

OF

ESTIMATES

The inadequacies of these estimates, and the doubtful character of some of the assumptions underlying them, have been pointed out in the preceding pages. In view of these inadequacies, it is extremely remarkable that the agreement is so close f o r the years since 1923. Of the three estimates, that from arrests for drunkenness is the least reliable. Because of this, it is best to take the average of the estimate from sources of production and the estimate from death rates as the final estimate of the consumption of beverage alcohol in the United States under prohibition; though the final estimate would not be appreciably different were the estimate from arrests f o r drunkenness to be included. During the early years of prohibition there is less agreement among the estimates, which, however, is readily understood. The estimate from sources of production is doubtless too low during those years, on account of the consumption of private stocks accumulated before the passage of the Volstead A c t ; while the estimate from the death rates is probably too high, due to the delayed effect of beer upon the death rate from cirrhosis of the liver. It has been pointed out in the preceding pages that these various estimates are subject to a very high degree of reliability, provided it is assumed that alcoholic beverages used since the adoption of prohibition have the same effect upon the death rate from alcoholism and cirrhosis of the liver as those used before prohibition. The fact that the three estimates, totally independent of one another, differ so little, may be considered evidence that this assumption is correct, and that there is little difference, in its effects upon deaths from these two causes, between the liquor sold now and that sold in pre-war times.

106

THE

ECONOMIC

RESULTS TABLE

OF

PROHIBITION

46

ESTIMATES OF THE CONSUMPTION OF ALCOHOLIC BEVERAGES IN THE UNITED STATES, 1920 TO 1930 ( g a l l o n s per

Year 1920

Estimate from sources of production

IÇ2I

•30

1922

1-54 1.96

19 23 1924 19-25 1926

1.53

1928 1929

1-75 1.86

1930

1-33

.15

.87 I.OI

.38 •72

i-35 1.36 1 -45 1.41 1.38

Beer Estimate from sources of production

Estimate from arrests

•45

3 1.27

1.91

19 2 7

Estimate from death rates

I 2

1-75 1.80

capita)

Spirits

Wine Estimate from sources of production

Estimate from death rates 5.63

1.26

•93

1.71 2.24

•93

2.84

•94 .98 1.02

3-46 4.21

1.10

6.05

1.04

7.11

503

6.13 6.21

•44 •57

6.12

•95 .90 .86

6.55 6.61 6.80

i 05 1.08

7-37 8.52 7.26

1.07 .89

6.90

.87

SOURCES OF DATA : E s t i m a t e s f r o m sources of p r o d u c t i o n : T a b l e 29, supra,

p. 71.

Estimates

Estimates

successive

f r o m death r a t e s : T a b l e 41, supra,

fiscal

p. 98.

for

y e a r s a v e r a g e d to c o n v e r t to c a l e n d a r years.

E s t i m a t e f r o m a r r e s t s : T a b l e 44, supra,

p. 102.

A l l estimates of spirits in proof gallons.

T h e r e have also been g i v e n , in connection with some of the preceding estimates,

figures

representing the probable

minimum and m a x i m u m limits o f consumption, based on standard errors.

It is not possible to compute such m a x i -

mum and m i n i m u m limits in the case o f the final estimate of consumption.

T h e close agreement of the three estimates

is open to only t w o explanations: either they are substantially accurate or agreement is due to an e x t r a o r d i n a r y coincidence. In respect to the v a r i o u s kinds of alcoholic

beverages

consumed in recent y e a r s there is not as much agreement a m o n g the estimates.

T h i s is due to the fact that

for

many years prior to prohibition there w a s a marked ten-

COMPARISON dency

OF ESTIMATES

f o r annual c h a n g e s

and of

107

in the c o n s u m p t i o n

of

spirits

beer to be s i m i l a r in direction a n d a m o u n t ,

and

even w i t h the v e r y best statistical technique f a c t o r s related to the consumption accurately kind.

isolated

of

one kind

from

those

of

beverage

connected

cannot

with

the

be

other

In respect to the c o n s u m p t i o n o f beer, the estimate

f r o m death rates a p p e a r s t o be c o n s i d e r a b l y too h i g h most of

the prohibition

period.

This

makes

it

for

probable

that the estimate of the c o n s u m p t i o n o f spirits is too l o w . For

wine

it has been possible to m a k e an e s t i m a t e

f r o m sources o f given In

in T a b l e

production.

of

of

these estimates

are

46.

Table 4 7 comparison

consumption

All

only

alcoholic

sumption in 1 9 2 1 - 2 2 ,

is m a d e b e t w e e n the beverages,

the

d u r i n g the e a r l y period o f

tion. and that in the m o r e

pre-war

estimated

recent period

con-

prohibi-

from

1927

to

1930. T A B L E 47 THE

CONSUMPTION

OF

ALCOHOLIC

BEFORE AND A F T E R

THE

BEVERAGES ADOPTION

IN

OF

THE

UNITED

STATES

PROHIBITION

(gallons per capita) PERIOD

SPIRITS

BEER

WINE

PURE ALCOHOL

I9II-I4

1-47

20-53

•59

I.69

1921-22

.92

1.49

•51

•73

1927-30

1.62

6.27

.98

1.14

S O U R C E S OF D A T A :

1911-14: Table 2, supra, p. 26. 1921-22 and 1927-30: Table 45, supra, p. 104, and Table 46, supra, p. 10G. Figures for spirits, wine and beer taken from the estimates from sources of production. T h e s e estimates indicate that d u r i n g the e a r l y y e a r s prohibition the per capita c o n s u m p t i o n o f duced

approximately

to

two-fifths, and

one-fifteenth the p r e - w a r level.

I n the

spirits w a s that

of

beer

four years

of reto

from

lo8

THE ECONOMIC

RESULTS

OF

PROHIBITION

1927 to 1930, however, the per capita consumption of spirits averaged about 10 per cent and of wine about 65 per cent greater than from 1 9 1 1 to 1 9 1 4 , while the consumption of beer was about 30 per cent as great. The total consumption of liquor, expressed in terms of its content of pure alcohol, dropped during the early years of prohibition to one-third the pre-war level, but in recent years has been two-thirds as great as prior to the World War.

PART THE

T W O

E F F E C T OF P R O H I B I T I O N

UPON

EXPENDITURES

CHAPTER PRE-PROHIBITION

VI

EXPENDITURES

FOR

ALCOHOLIC

BEVERAGES

One of the most important of the economic aspects of prohibition is the extent to which expenditures for alcoholic beverages have been modified thereby. T o estimate such changes in expenditure it is necessary first to estimate the amounts spent for liquor prior to prohibition, both by the entire nation and by important groups in the population. T H E N A T I O N A L LIQUOR B I L L

There is no way of ascertaining exactly what the American public spent for its alcoholic beverages before prohibition. The total liquor bill may, however, be estimated from retail prices and records of consumption. Pre-Prohibition Prices of Alcoholic Beverages. As shown in Table 48, wholesale prices of alcoholic beverages were comparatively stable from 1891 to 1 9 1 6 , lager beer ranging from $5 to $7 per barrel and whisky from $ 1 . 1 5 to $ 1 . 4 0 per gallon. Retail prices, according to the testimony of persons living throughout this period, were still more stable than wholesale prices. Precise data, however, on retail prices are not obtainable, and the accompanying estimates (Table 49) are the best available. HI

112

THE

ECONOMIC

RESULTS TABLE

WHOLESALE PRICES OF ALCOHOLIC

OF

PROHIBITION

48

BEVERAGES IN THE UNITED STATES,

1890 TO 1918 Whisky gallon

Year

Ale barrel

Lager Beer barrel

Porter barrel

(a)

(b)

1890

7.OO-8.OO

5.00-7.00

7.00-8.00

1.043

1.092

1891

7.OO-8.OO

5.OO-7.OO

7.00-8.00

1.151

1.210

1892

7.OO-8.OO

5.00-7.00

7.OO-8.OO

1.158

I.I57

1893

7.OO-8.OO

6.60

7.OO-8.OO

I.I56

1894

7.OO-8.OO

6.00

7.OO-8.OO

I-I54 I.I99

1895 1896

7.OO-8.OO

6.00

7.OO-8.OO

I.225

1.212

7.OO-8.OO

7.OO-8.OO

1.205

1.203

1897

7.OO-8.OO

5-75 5.60

7.OO-8.OO

I.189

I.183

1898

7.OO-8.OO

6.60

7.00-8.00

I.229

1.222

1899

7.00-8.00

6.60

7.00-8.00

I.250

1.234

1900

7.OO-8.OO

6.30

7.00-8.00

I.248

1901

750

6.30

7-50

1.286

1.245 I.265

1902

7-50

6.30

7-5O

I.3I0

1903

7-50

6.30

7.50

1.281

I-3I4 1.282

1904

7-50

6.30

7-50

I.270

I.263

190S 1906

7.50

6.30

7-50

1.264

I.2ÖI

7-50

6.30

7-50

1.288

1.288

1907

750

6.30

7-50

I.312

I-3I3

1908

7-50

6.00

7-50

1-358

1-358

1909

7-50

6.00

7-50

1.358

I9IO

7-50

6.00

7-50

1-325

1911

8.00

6.00

8.00

1-340

1912

8.00

6.00

8.00

1-340

1913 1914

8.00

6.00

8.00

1.316

8.27

6.27

8.25

1-367

8.27

6.25

8.50

1.390

8.50

1915 1916

6.50

8.50

1.404

1917

7-25

9.00

2.444

1918

10.50

10.50

5.460

1.120

SOURCES OF DATA : Ale,

lager

beer,

c i n n a t i C h a m b e r of Whisky the

Cost

porter

and w h i s k y

(b) : Massachusetts, of

Living

( a ) : annual

reports

of

the

Cin-

Commerce. (Boston,

House,

Report

1910), pp. 673-682.

of

the

Commission

on

PRE-PROHIBITION

EXPENDITURES

TABLE ESTIMATED

RETAIL

PRICES

OF A L C O H O L I C

U N I T E D S T A T E S P R I O R TO

Distilled liquors, domestic. Distilled liquors, imported Malt liquor, domestic Malt liquor, imported Wine, domestic Wine, imported

» 3

49 BEVERAGES I N

THE

1915

Price per gallon (a) (b) $5.00 $4.50 8.00 Twice the declared value, including duty .50 .So 1.00 1.00 2.00 2.00 4.00 Twice the declared value, including duty

S O U R C E S OK D A T A :

( a ) George B. Waldron, "Economics Chautauquan, v. 51, pp. 96-107. (b) The American PP-

of

the Drink

Traffic,"

The

Grocer, July 12, 1911, pp. 6-7, and June 9, 1915,

4-5-

The Annual Liquor Bill Prior

to Prohibition.

The

stability of retail prices and the records of consumption make it possible to estimate the total amount spent for alcoholic beverages. This is done in Table 50, using the price estimates of The American Grocer, except in the case of domestic distilled liquors, in which the higher estimate of Mr. Waldron has been used. During the entire period between the Civil W a r and the adoption of prohibition alcoholic beverages were an important source of government revenue, and in recent years other sources have been necessary to take their place. Since this revenue, from whatever source derived, reduces the share of the national income available f o r spending by individuals, the actual gain in purchasing power through complete abstention from alcoholic liquors is not the total expenditure upon alcoholic drinks, but such expenditure less the government revenue derived therefrom. F o r this reason there is also given in Table 50 the estimated total national, state and municipal revenue from liquor, and the

114

THE

ECONOMIC

RESULTS

OF

PROHIBITION

net annual liquor bill of the country. Since the revenues of local governments, aside f r o m cities over 30,000 population, obtained f r o m liquor are not obtainable, the estimate of the net annual liquor bill tends to be larger than the true figure. On the other hand, however, the estimate does not include "moonshine" and home-made drinks, on which no Federal tax was paid. TABLE ESTIMATED

EXPENDITURES

ON

50

ALCOHOLIC

STATES,

BEVERAGES

IN

THE

UNITED

1890-1916

(millions of dollars) Year ending J u n e 30

Spirits

1890

442

75

429

946

141

I900

496

613

1,184

222

962

I9IO

6 77

75 141

929

1,747

283

1,464

1911

704

142

987

710

970

279 281

1913 1914

754

132 130

1,834 1,812

1,555

1912

I,OI9

1,903

291

1,53' I,6l2

1915 I916

Wine

Beer

Total

Government revenue

Net liquor bill 80S

732

123

1,032

1,887

287

I,6oo

647

76

929

1,652

284

1,368

714

IIO

9IO

1,734

305

1,429

SOURCES OF D A T A :

Expenditure on spirits, wine and beer: computed from price data in Table 49, supra, p. 113, and data of production and imports from Statistical Abstract of the United States, 1912, 1920 and 1922. Government revenue: Table 1 1 5 , infra, p. 249. Liquor revenue of states and cities estimated by interpolation for years not available.

J u s t as we have taken the years f r o m 1 9 1 1 to 1 9 1 4 as representative of the pre-prohibition consumption of alcoholic beverages, we may take them as typical of pre-prohibition expenditures upon those beverages. The average annual expenditure during these f o u r years amounted to $ 1 , 8 5 9 , 0 0 0 , 0 0 0 , of which $ 7 2 5 , 0 0 0 , 0 0 0 was f o r spirits, $ 1 3 2 , 0 0 0 , 0 0 0 f o r wine, and $ 1 , 0 0 2 , 0 0 0 , 0 0 0 f o r beer. It will be noted

f r o m the preceding tables that the

PRE-PROHIBITION

expenditure

for

per

increased

capita,

EXPENDITURES

alcoholic

beverages,

during

both

in total

the decade

1900, and also f r o m 1900 to 1910.

from

and

1890

to

T h i s increase, h o w -

ever, w a s at a much slower rate than the increase of national

income, so that the percentage o f

the

the

national

income spent on alcoholic beverages decreased about one per cent d u r i n g each of national

income

these decades.

and the relation of

The

estimated

liquor

expenditure

INCOME

SPENT

thereto are given in T a b l e 51. T A B L E 51 ESTIMATED

PERCENTAGE

ALCOHOLIC

OF

THE

BEVERAGES

Spent for alcoholic beverages (millions)

NATIONAL

IN T H E U N I T E D

FOR

STATES

P e r cent. for alcoholic beverages

Spent for alcoholic beverages, tax deducted (millions)

P e r cent. for alcoholic beverages, tax deducted

Year

Total national incomc (millions)

1890

$12,082

$946

7-8

$805

1900

17,965

1,184

6.6

962

5-4

19IO

31,400

1,747

5.6

1,464

4-7

6-7

1911-14 average

32,9S