Friday, January 22, 2016

Did the U.S. Tax Man Hound Jacob Sheaffer to His Grave?

Jacob Sheaffer was highly respected in his home town of Lancaster, Pennsylvania.  The scion of an early settler family, Sheaffer owned a distillery, a liquor dealership and a shoe store.  Times were good until October, 1893, when a fire destroyed his distillery, resulting in relentless pressure from a federal collector of revenue that ultimately may have resulted in ending Sheaffer’s life.

As the U.S. Government years later tacitly acknowledged, Sheaffer deserved a better fate.  A man with clear artistic sense, as shown by the trade card above, Jacob was born in July 1846, one of eleven children of Adam G. and Catherine Fry Sheaffer.   His father was a prosperous German Mennonite farmer in Lancaster County, as had been his grandfather and great-grandfather.   The boy received the standard elementary and secondary education in Lancaster public schools.

After serving an apprenticeship with local merchants, Sheaffer at about age 40, entered the public record when a publication called “Friday Mornings Record” reported that a distillery had begun operations at local community of Lilitz, six miles from Lancaster.  Under Sheaffer’s management it was turning out two barrels of rye whiskey daily.  “Thus it will continue until 10,000 gallons are made and stored in the loft of the brick bonded warehouse on the premises of the distillery and can remain there for three years, if necessary,”  the paper reported.  “On the same floor he has 1,760 gallons of three-summer old liquor and in the new iron bonded warehouse over 5,000 gallons of his own distillation, beside a lot of old whiskey in the retail room.”

The Record also reported that Sheaffer had opened a liquor store at No. 3 North Duke Street in Lancaster.  In a burst of enthusiasm, it ventured:  “There can be no questioning but the he is prepared to furnish the genuine articles at his store, wholesale or retail, tax paid or in bond.”  Here by inference was no fly by night, semi-moonshining operation, but one cooperating fully with the U.S. Government under the Bottled-in-Bond Act. 
Sheaffer’s enterprise must have met with early success because within several years he had moved to larger quarters in the heart of Lancaster’s business district at 15 Penn Square calling his company “Sheaffer’s Wholesale Liquor House,”  as shown above on an attractive giveaway celluloid-backed mirror.  He engaged his younger brother, Amos, as a salesman.

Sheaffer’s flagship brand was “Gold Rod” whiskey that he bottled in a series of gracefully designed salt-glazed stoneware jugs, as displayed throughout this post.  Inexplicably, Jacob never trademarked this label.   Golden Rod also came in glass square cylinder quart bottles.  No wording appears on the body to identify the brand, but instead is embossed on the bottom of each glass container.   

Also demonstrating his artistic sense, Sheaffer reached out to the Fulper Pottery of Flemington, New Jersey, to provide him with a gold-lettered, two-toned “fancy” jug for his second brand, “Jacob F. Sheaffer Pure Rye.” 

With his growing wealth from liquor sales, Sheaffer branched out into other areas, acquiring a shoe store he called “Factory Shoe Store.”  He also purchased a home in Lancaster, shown here, about four blocks from his distillery at 646-648 East King Street.  Despite an 1893 robbery at the distillery address, in which his watchman was assaulted, things seemed to be going Sheaffer’s way.

All that changed for this whiskey man in October 1893, while he was away attending the Columbian Exposition in Chicago.  Sheaffer’s bonded warehouse was destroyed by fire, taking with it some 40,000 gallons of whiskey that was aging there.  He had insurance, but that proved problematic.  Although the policies were in full force, many of the companies that had issued them refused to pay on the grounds that the fire had been set, tacitly accusing Sheaffer of arson.  He took them to court and won.  A U.S. Senate report summarized the outcome: “…The companies practically gave up their line of defense and settled for nearly the full amount demanded by the plaintiff.  Sheaffer got $30,000.

Despite that victory, Sheaffer’s problems had just begun.  Although the insurance included the full value of the lost property, including the whiskey consumed in the flames, it did not cover the Government tax which, under the Bottled in Bond Act, was levied upon the manufacture of whiskey and was to be paid upon its sale.  Records of the Department of the Treasury put the amount at $43,016 — equivalent to more than $1,000,000 today.  During the months the insurance cases were pending, collection of that tax had been suspended by U.S. officials.

Using the money he received in the insurance settlement, Sheaffer rebuilt his distillery and began to make whiskey again.  Then, after a delay of three years, the U.S. Government in 1896 renewed its demand for payment of the tax on the whiskey that had been destroyed in the fire.  Now authorities wanted even more money, charging an additional $2,150 as a five percent penalty.  Although Sheaffer asked authorities to abate the tax in view of the circumstances, he was was refused and the Treasury Department proceeded to enforce collection.

The major actor on the Federal side was the Collector of Internal Revenue for the Ninth District of Pennsylvania whose name, ironically given his role, was R. E. Shearer.  A political appointee of the Democratic Administration of Grover Cleveland and a friend of Pennsylvania’s governor, Shearer was relentless in pursuing payment from Sheaffer.  The pressure caused this once upright Lancaster businessman to take desperate steps.  He had obtained a financial interest in forty-four head of cattle housed in the stockyard of some friends.  The distiller was feeding the bovines with spent mash to fatten them for later sale and a split of the profits.  Apparently desperate to raise money, however, Sheaffer broke into the stockyards without the knowledge or permission of his partners, took away the cattle and sold them.  His partners hauled him into court and secured a judgment against him for $1,198. 

With his reputation in Lancaster now besmirched, Sheaffer almost certainly knew and dreaded what  would come.  The news made headlines in the Pittsburgh Post-Gazette, hundreds of miles away:  “Lancaster Pa, Feb. 15, 1897 — A sensation was created in business circles here today when the sheriff closed the liquor store and the shoe store of Jacob F. Sheaffer….”  The sheriff was acting on orders from the merciless revenue collector R. E. Shearer who then seized all Sheaffer’s business properties, including the distillery, the warehouse, and its contents.  Jacob had borrowed almost $15,000 (equiv. $350,000) from relatives to rebuild his distillery;  now he met to inform them he was forced to default on their loans.   David Landis, a local banker and friend who had gone surety for Sheaffer was forced to sell his personal possessions to complete the payment to the Feds.

In disgrace over rustling cattle, having lost his businesses, defaulted on relatives and brought down a trusting friend, Sheaffer at age 52 must have been in deep despair and it seems to have impaired his health.   Just over a year later after the foreclosure, in April 1898, Jacob died and was buried in Lancaster’s Woodward Hill Cemetery.  His widow, Mary, seemingly deeply affected by all these horrific events, joined him in the grave less than four months later. She was only 45 years old. Their monument is shown here.
The surviving members of the family, outraged about the injustice that had been done to Sheaffer, taxed unfairly on destroyed whiskey,  clamored after their political representatives in Washington to right the wrong by compensating Sheaffer’s estate.  The Landis family did likewise.  A Pennsylvania senator in 1903 introduced a sympathetic bill that asked that the U.S. Court of Claims determine compensation for the injustices. It passed. The Court agreed that a mistake had been made and that recompense was due. It awarded the Sheaffer estate $34,055, and Landis $11,112.   The distribution formula subsequently was challenged in court by the Landis estate and not finally adjudicated until 1924 — more than a quarter century after the seizure — when the Supreme Court of Pennsylvania ruled that the Court of Claims distribution should stand.

Of course, Jacob Sheaffer no longer was around to enjoy the satisfaction of knowing that his utter ruin at the hands of an over-zealous Federal officer now had been repudiated officially by the U.S. Congress and Federal Courts and compensation paid.  Nor could the money ceded to Sheaffer’s family bring Jacob back from the early grave to which his own government seemingly had hounded him.


  1. I really appreciate the time to compose this article. As a descendant of Sheaffer (Susan Sheaffer, my grandmother) with little knowlege of my family history this helps a bunch and helps me understand my local history and familial history better.

  2. Dear "paige.weirich227: Thanks for being in touch and your kind remarks about the post on Jacob Sheaffer. The man really got a raw deal and it may have hastened his death. I am sure as you do your family history you will find other key facts about Jacob and his problems.