Wednesday, March 22, 2017

St. Louis’ Billy Lee: Dynamiting the Whiskey Trust

In 1891, William H.”Billy” Lee with four other St. Louis whiskey wholesalers struck a blow at “The Whiskey Trust,”  a cartel that sought to monopolize distilling and selling whiskey in the United States in order to jack up prices.  The rebellion spelled the beginning of the end of an organization that did not hesitate to use dynamite to get its way.

Taking a leaf from the trusts in the petroleum and other American industries, a few crafty men in Peoria, Illinois, backed by Wall Street moguls, in May 1887 created the Distillers’ and Cattle Feeders’ Trust, known unofficially as the Whiskey Trust.  They aggregated small-scale distilleries, then either closed them or cut back their production in order to control the quantity and price of whiskey on the market.  

In its early years, the Whiskey Trust was profitable, paid dividends and tried to convince other distilleries to join. It employed three strategies:  Initially it attempted to convince owners that it was profitable to join the Trust, giving stock and sometimes employing the owner.  If resisted, the Whiskey Trust moved into the vicinity where the distillery was located and undercut its prices. The idea was to convince the owner to join the Trust—or put the distillery out of business. Finally, if other methods failed to convince the owner to join, dynamite was an option. [See my June 4, 2012, post on the Shufeldt distillery bombing.]

But the Trust was not content with controlling distillery output, it also had to control “rectifiers,” wholesalers who bought whiskey to blend for color, taste, and body and then issued their own proprietary brands.  Rectifiers signing up with the Trust were given a break on price but paid a five cent a gallon surcharge that was kept by the organization and returned only if the rectifier had not cut prices or purchased spirits from non-Trust sources.   By this time the monopoly had cut annual U.S. whiskey production drastically and reportedly controlled three-fourths of available supplies.
Enter Billy Lee, a St. Louis liquor wholesaler with an interesting pedigree.  His father Abraham H. Lee, a native of Ohio, had come to Missouri as a young man, working as a clerk on Mississippi steamboats and ultimately becoming a merchant.  More important, in 1867,  Abraham won a lottery that was worth in today’s dollars, $5,000,000.  Soon after, he returned to his village outside St. Louis to build a three-story mansion, shown above, reported to have brought in “fine artisans from from various spots for the work.”  Staircases were walnut, windows were art glass, and bathrooms were elaborate beyond anything seen before in the vicinity.  That is where Lee grew up, the second son.  From a passport description we know that in maturity he was just under five feet, five inches tall, with blue gray eyes, and chubby, with a oval face and double chin.

Lee appears early to have gravitated to the whiskey trade, possibly as the result of his 1874 marriage to Matilda McCartney when she was 17 and he was 21.  She was the daughter of a successful St. Louis whiskey wholesaler named Samuel McCartney and Billy likely met Matilda while being in her father’s employ.  When that business closed, he gravitated with another McCartney clerk, Joel Wood, to the liquor house of Tyra Hill & Company. 

Although virtually every distiller and rectifier in St. Louis was embroiled in the “Great Whiskey Ring” scandal during the Grant Administration, the Tyra Hill organization, according to one source:  “Continued to do a legitimate business, and refused most positively to enter the unlawful combination, although it was impossible for a ‘straight’ dealer to continue business without losing money.”  Commended by Federal authorities for their honesty, the Tyra Hill staff emerged as local heroes.

When Hill retired in 1878, Lee and Wood took over, creating a partnership at 218 Walnut Street, in a busy commercial area shown here.  Their firm brought praise from one local source:  “Mssrs. Wood and Lee have a very large business which they retain from the old firm, and it is their determination to win the most honorable reputation that can be achieved….Their aim will be directed toward a position honorably in advance of all competition.”

That competition had been depleted by the fall of the Whiskey Ring.  More than 200 were indicted and 110 convicted, most of them from St. Louis.  Many of those that were not in prison left town.  Wood and Lee prospered and consequently needed more space, triggering a move to nearby 113 North Second Street, the avenue shown above.  Two years later Wood left the firm and Lee carried on as a single proprietor.

William H. Lee & Company, as the new firm was called,featured a range of proprietary brands, mixed up on the premises.  Among them were "Billy Lee’s,” "Bob Briarly.” "Boone Creek,” "Every Morning,” "Gene Ringler,” “Golden Ray,” ”High Grade Maryland Rye,” "Hillary Knott,” "King B,” “Kingston,” “Norfolk,” “Pemberton,” "Pennsylvania Mountain Rye,” "Tommy Atkins,” and "W & L Rye.”  After the Federal trademark laws were strengthened by Congress, the company spent time and money to register at least eight of those brands with the government in 1905 and 1906, a step other rectifiers often neglected.
Meanwhile, Billy Lee was having a personal life.  His first child, Josephine, had been born in 1887, followed by two more daughters, Julia in 1881 and Elmira in 1885.  A son, William H. Jr. completed the family in 1891.  To house his growing brood, Lee built a mansion home at 3713 West Pine Blvd, shown here in more recent times, apparently boarded up.  Two Irish servant girls also were resident there.

It is not clear what motivated Lee, with his established reputation for rectitude, initially to agree to the terms of the Whiskey Trust.  A likely rationale was the stranglehold that the monopoly held on whiskey supplies, the ingredient essential of the many brands Lee was selling.  Initially the five cents a gallon “forfeit” might have looked attractive given the alternatives.  With time and experience Lee and other wholesalers found strong objection to it on the grounds that they were given no interest on the money nor any assurance of its return.  Moreover, by yielding they placed themselves, as the Chicago Tribune put it, “hopelessly in the grasp of the Trust.”

Lee and his colleagues made their move in April of 1891, as reported in the New York Times, a strong opponent of the cartel.  Headlining “REBELLING AGAINST A TRUST, the Times wrote:  “For some time there have been rumors of discontent among the whiskey dealers of St. Louis, and rumors of rebellion have been rife.  Many wholesale dealers and jobbers were quite free in  their expressions of dissatisfaction with the manner in which the Trust was managing the whiskey-making business of the country, practically controlling it and dictating to the dealers.

In retaliation, Lee and the others collaborated on building a whiskey plant of their own, calling it the Central Distilling Company.   At the cost of $400,000 they constructed it at a premier site just outside of St. Louis.  The plant came on line late in 1891 with a daily mashing capacity of 4,000 bushels of corn.  This was enough for the partners to satisfy their own requirements and to have additional supplies to sell.  Initially Central Distilling kept sales prices at levels comparable to those set by the Trust.  By the following year, however, the new corporation announced it would cut the price of spirits to $1.10 a gallon, undercutting the Trust by five cents.  If there had been an unspoken truce, this move broke it.

While Trust officers were furious, there was little they could do.  The St. Louis action had begun a downward slide for the monopoly.  In May 1892, owners of the cartel’s five best paying houses announced that, because none of them had been paid the rent required for Trust control, they would repossess their plants at once and put whiskey on the market independently.  Opined the New York Times:  “It looks as if the Whiskey Trust is doomed.”

Although the Whiskey Trust did survive until National Prohibition, it was much diminished and never achieved the power it once knew.  Meanwhile Lee could bask in the glow of being part of the initial blow helped sink the organization. He continued to pilot his wholesale liquor house until May 1903 when he died suddenly, only 51 years old.  Cause of death was recorded as pneumonia.  With his widow, children and many friends by his graveside, he was interred in the Catholic Calvary Cemetery of St. Louis.

The liquor house William H. Lee had shepherded for 16 years was carried on under his name until the imposition of National Prohibition.  John S. Morrin became president and guided its fortunes.  A Trust employee targeted him with a lawsuit for $25,000 actual and $50,000 punitive damages, claiming malicious libel.  Asked about the suit, Morrin replied that it had been brought because the Lee company had passed from control of Trust officials who now were retaliating.  I find no indication that the suit was successful.  

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