At this point it is necessary to set the scene into which Kelly introduced himself. Tennessee was the last state to join the Confederacy in June, 1961. After its governor had declared it independent of the United States, Nashville became an immediate target of Union forces. Not only was it the capital of the Tennessee, the city was significant as a shipping port on the Cumberland River. In 1862 Union troops, following battles that brought Ulysses S. Grant to the fore, occupied the city.
Although Confederate attempts to take back Nashville continued over the next two years, refugees, white and black, poured into the city because jobs were plentiful in the depots, warehouses and hospitals serving the Union war effort. With this large transient population, Nashville had a flourishing red light district and dozens of saloons. Often the U.S. military government gave preferential treatment to Northerners who came to do business. Enter James Kelly. The assumption is that he engaged in the booming liquor trade during the time of conflict.
With the cessation of hostilities, however, Kelly moved further south to Chattanooga, a major city that had been established 50 years earlier as a trading post on the Tennessee River. At this point he would have been considered a “carpetbagger,” a Northern entrepreneur looking to make a quick dollar from the conquered Southerners, abetted by the occupying Federal authorities. In 1866, he began by opening a retail liquor store. As that business grew he moved into wholesale liquor sales. Like most wholesalers, Kelly also engaged in “rectifying” whiskey, that is blending raw whiskeys to taste, bottling it and slapping on his own labels.
In 1876, Kelly merged his efforts with George W. Davenport, a native of Alabama, who had come to Chattanooga about 1874 to work as a clerk in a whiskey and cigars wholesaler and eventually had taken over the business. The new company was called Kelly & Davenport and originally had two locations, 63-65 Ninth Street and 253 Market Street. The company grew steadily, as one contemporary said, “building up a large and profitable business. The trade of the house in the Southern States is an extensive one.” About 1883, apparently as a result of its growth, the firm moved to 13-15 West Ninth.
After 14 years in business, the partners split. Kelly maintained the existing business under the name J.W. Kelly & Company while Davenport, with a brother, went on to establish a dry goods and furnishing store. About this time Kelly made two important decisions. First, he hired Carl White as his manager although the Louisiana native was a considerably younger man. White came with a reputation as an able merchandiser and promoter. Second, Kelly started his own distillery. Called the Deep Spring Distillery, it was located in Chattanooga on East Missionary Avenue. Many wholesalers/rectifiers eventually took similar steps as a means of insuring themselves of a steady flow of whiskey.
With White’s merchandising and the distillery to provide product, Kelly’s business continued to expand, advertised with a wide array of liquor labels. Among them were "Belmont,” "Golden Age,” "Mountain City Corn Shuck, " "Old Milford,” "Old Tenn. Sugar Corn," "Pine Split Gin,” "Silver Spring.” "Silver Spring Corn,” “Lincoln County,” and "Deep Spring." Kelly wisely, but at some expense, registered the most of these brands with the U.S. Patent and Trademark Office in 1905.
Deep Spring Tennessee Whiskey was Kelly’s flagship label. He advertised it using slogans such as “The Whiskey Without an Unkind Thought,” and “Made on Honor, Sold on Merit.” For retail sales Kelly preferred glass containers, putting his whiskey in flask sized and both round and square quart bottles. His saloon sign for Deep Springs whiskey was among the most imaginative to emerge from the pre-Prohibition era. General Robert E. Lee on horseback is shown saluting his victorious Confederates as two “Reb” battle flags flutter in the background. In the foreground lies a casualty of the battle who is being given a glass of whiskey by a comely young woman. As shown in the detail, she has at her disposal a full case of Deep Springs Whiskey.
Like their competitors for Southern markets, J.W. Kelly and Co. merchandised their whiskey by giveaways to favored customers, including gifts to saloons. Among the items were shot and highball glasses and bar signs. In addition to the Lee design, Kelly issued a sign showing a fully dressed female in a provocative pose on a railroad platform. This likely was to remind to Southern buyers that the company could deliver its whiskey by rail.
Despite accumulating, as one biographer put it, “a large fortune,” Kelly was not a carpetbagger who would take his money and run back North. He stayed to become an honored citizen. As the same biography states: “Mr. Kelly has found leisure to devote to the promotion of the general interests of Chattanooga at home and abroad. He is one of the founders of the Lookout Rolling Mills and is a stockholder in the same. He is also a stockholder in the Merchants National Bank and is interested in other enterprises of the city....Mr. Kelly has unbounded faith in the South, and especially East Tennessee.”
Kelly’s faith in the South and Tennessee must have been tempered by the growing tide of Prohibition in the region. Anti-alcohol forces gained steady ground in Tennessee during the late 19th and early 20th Century. The Four Mile Act, first passed by the Tennessee legislature in 1877 prohibited sale of liquor within four miles of an active school, exempting incorporated towns. Repeatedly expanded, the law effectively turned most of rural Tennessee “dry.” The state’s courts consistently rejected challenges to those laws.
In 1909 the Tennessee legislature passed a law that completely banned all liquor sales within its borders. Many saloons and liquor retailers were forced out of business. J. W. Kelly & Co. and the Deep Spring Distillery continued to operate as a result of substantial mail order sales in other states. Tennessee’s Attorney General was not blind to this trade. In 1910 he hauled Kelly into court for selling a shipment of whiskey to a customer in New York. The state’s argument was that such sales opened the door for fraudulent reshipment of liquor to Tennessee customers. In “State vs. J.W. Kelly & Co.,” the Tennessee Supreme Court dismissed that argument and ruled that Kelly’s shipment was within the protection of the interstate commerce clause of the United States Constitution. The company rolled on until about 1915 or 1916, closing for good when the Webb-Kenyon Act, in effect, forbid interstate liquor sales into dry areas.
By this time, James Kelly had died, according to one source, passing in 1907 at the age of 63. He is buried in Chattanooga’s Forest Hills Cemetery, Section K 74 NE. His wife, Lizzie, lies by his side. It is said that Kelly was involved in the management of his liquor house right up until the end. The skepticism that locals must have had about this man from the North with an odd accent had long since dissipated. For more than 40 years James Kelly had proved that he was no carpetbagger but a true “son” of Chattanooga and devoted to its future.
Note: Much of the information and quotes here come from a short biography that appeared in a volume entitled “East Tennessee Historical and Biographical” published by a Chattanooga printing house in 1893.