Inflation and the Hide Trade

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The table below shows the inflation rate in Ontario during the period that the Ragnarokr leather shop operated. The intention of the author was to compare this information with the corresponding increase in the wages at the leather shop but sufficient wage data from Ragnarokr is not available.

In general, wages at the shop failed to keep pace with inflation. The shop kept a large chart that showed the trends of income and expenses on a yearly basis. By the middle 1970s the trend was definitely unfavorable. Many changes were made over the years to keep the leather shop competitive but without success. The failure of the business to keep pace with inflation influenced the decision by George and Philip to find another business that could substitute for the leather shop as the community’s main source of income. This same problem prompted the shop to close in 1996.

Inflation and Consumer Price Index (CPI)

Minimum wage and the Composite Consumer Price Index (CPI) (Base 100=1860)
Year USA Canada Ontario CPI
1938 $0.25 unknown unknown 169
1939 $0.30 166
1945 $0.40 215
1950 $0.75 288
1956 $1.00 325
1961 $1.15 358
1963 $1.25 366
1965 $1.25 $1.00 377
1967 $1.40 399
1968 $1.60 416
1969 $1.30
1970 $1.65 $1.50 464
1971 $1.75 $1.65 484
1972 $1.90 500
1973 $1.80 531
1974 $2.00 $2.20 $2.00 590
1975 $2.10 $2.60 $2.40 643
1976 $2.30 $2.90 $2.65 680
1978 $2.65 $2.85 780
1979 $2.90 $3.00 868
1980 $3.10 $3.25 985
1981 $3.35 $3.50 $3.30,3.50 1,087
1984 $3.85, 4.00 1,243
1986 $4.00 $4.35 1,311
1987 $4.55 1,359
1988 $4.75 1,415
1989 $5.00 1,483
1990 $3.80 $5.40 1,563
1991 $4.25 $6.00 1,629
1992 $6.35 1,678
1994 $6.70 1,773
1995 $6.85 1,822
1996 $4.75 1,876
1997 $5.15 1,920
1998 1,949
1999 1,992
2000 2,059

The values of the Consumer Price Index were taken from John J. McCusker, “How Much Is That In Real Money?: A Historial Commodity Price Index for Use as a Deflator of Money Values in the Economy of the United States”. Second Edition, Revised and Enlarged. Worcester, Mass.: American Antiquarian Society, 2001.

The Hide Trade

In addition to ordinary monetary inflation, the cost of the shop’s primary raw material, leather, increased rapidly during the 1970s. This was reportedly due to developments in Russia and Argentina. Apparently manufacturers in Russia made the decision to expand their output of leather goods at about the same time Argentina decided to expand theirs. This meant that Russia was purchasing more raw leather on the world market while Argentina was restricting its export of raw hides.

Argentina has 50 to 60 million bovine cattle on the hoof, the sixth largest herd worldwide. Of these 10 to 15 million are slaughtered every year. Before 1972 the country exported between 140,000 and 177,000 tons of raw hides every year. In May 1972 authorities in Argentina prohibited the export of raw (salted) hides to encourage the domestic manufacture of shoes and other leather goods. By 1978 exports of raw hides had dropped to 7,000 tons. In August 1979 the prohibition was changed to a 20% export tax but in September 1985 exports of raw hides was once again suspended.

As of result of Argentine and Russian trade policies, the hide trade was disrupted. The price of the raw hides rose sharply. Since the cost of the raw hides is from 50% to 60% of the cost of the finished leather, tanneries experienced cash flow problems and many of the smaller tanneries closed down or were sold. This reduced the variety of leathers available at the same time the price increased.

The yield of the tanned leather also decreased. Raw hide from Argentina was prized because, it is said, barbed-wire fences and branding were less common there than in North America. Cattle that make contact with a barbed-wire fence are cut by the barbs. When the cut heals a scar is left on the hide. The scar shows on the top-grain or grain split leather and is considered a defect. This is especially true for the branded area on the cow’s flank. Most factories try to avoid using the scarred portion and this reduces the yield from the hide. The disappearance of the Argentine hides led to a decrease in the yield of the average cow hide.

This combination of factors more than doubled the cost of leather. For Ragnarokr an even worse outcome was the decline in the availability of the type of leather the leather shop used for its line of accessories. The preferred leather was a bark-tanned leather known in the shop as “latigo”. By the late 1970s the leather shop was forced to import leather from a tannery in the southern United States, the only known manufacturer of that style of lealther. The result was that the craftsmen attempted to substitute more easily obtainable leathers. The stark, New England-style that was characteristic of Ragnarokr’s belts and handbags when it opened in 1969 was gradually lost. The product line also changed as the craftsmen adapted to both changing fashion and availability of findings and leather.

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