Tuesday, March 5, 2019

The Schmidt Liquor House Was All About Family


In 1899, a commercial review of the Pittsburgh area enthused about the liquor business of George W. Schmidt, one that had been founded by his father: “…It has come to a golden epoch in its history as a progressive house in Western Pennsylvania.  Not many years later, however, Schmidt, shown here, was filing for bankruptcy having diverted today’s dollar equivalent of almost $1.2 million from the corporation to other purposes.  Those with the most to lose, however, did not care:  They were family.

The Schmidt liquor interests long had been a family affair.  William Schmidt had established the business in 1836 at 409 Penn Avenue in an area called Bayardstown.  In those days liquor and wine had to be shipped into Pittsburgh via sailing vessels to New Orleans and then brought upriver on the Mississippi and Ohio Rivers.  With the construction of the Pennsylvania Canal network it became possible to receive shipments by canal boat from New York and Philadelphia.  According to the review:  “The journey from the wine cellars of Europe to this city then consumed from four to six months, while at the present time by steamer and the use of cable, it requires about fourteen days for the filling of an order.”

William ran the Schmidt liquor enterprise until 1854 when management was taken over by his son, Joseph, who is recorded as having run it until 1865.  At that point a second son, George, just 19 years old, took charge. He is shown here in a portrait done when he was about 35. He had been married the year before the painting. His bride, Ellen, a Pennsylvania woman of Irish Ancestry. was fourteen years younger, according to census records.  The couple would have nine children over the next twenty years, one of whom died in infancy.  

Upon George’s accession to the liquor trade, he took a partner, William J. Friday, an older Pittsburgh local with a background as a distiller and wholesale liquor dealer.  Their collaboration over the ensuing years proved to be highly profitable. After several moves to larger quarters, they took over a building at 384 & 386 Penn Streets.  This three story structure provided the partners with ample room to store rye and bourbon whiskeys and additionally allowed them to “rectify,” that is, blend, their own brands on premises, including “1855 Pure Rye,” “McKim’s 1860,” and “Old Columbia.”

The need for more space continued to press the partners and in 1885 Schmidt determined to build a new building to house the enterprise.  Accompanied by considerable hoopla, the company opened there on May 24th, 1886.  The Pittsburgh Press headlined: "Formal opening of the Schmidt Building," "Colossal Establishment," "A Triumph of Architectural Art Blended with Mercantile Enterprise."   Shown here, the building was located on Pittsburgh’s principal business street, Fifth Avenue.   It was eight stories high.  The cellar, first floor and a connecting four-story warehouse in the rear were occupied by the liquor house.

The upper stories were divided into some ninety offices.  The Press story called the building Schmidt’s “cherished dream” and:  “…The finest structure in the land devoted to the wholesale wine, liquor and cigar business….It has been erected at great expense and in the most thorough manner, with the sole purpose of making a superior office building and perfect in all its appointments.”

A decade after the move, however, the partnership of Schmidt and Friday broke up.  William Friday opened his own wine, liquor and cigar sales at 630-633 Smithfield.  What precipitated the split is not clear but given the subsequent money problems that embroiled Schmidt, it may well have involved differences over financial management of the firm. 

With Friday gone, a new letterhead was rolled out for the business. Moreover,  the owner’s son,  George W. Jr., was now working for his father, being trained in the liquor trade and groomed for management.  This period saw the liquor house issue its blended whiskies in large ceramic jugs with Schmidt’s name stenciled on them and the emergence of a new brand, “Fine Old Rye Whiskey,” shown right with its elaborate paper label.  The company was advertising itself as “The largest and most complete Wine and Liquor House in the United States.”

With the departure of Friday, the company also incorporated.
Directors all were members of George’s family, including Ellen J., his wife; Mary Ann, his daughter; George Jr., and Mary Fuherer, his married sister.  The liquor house was capitalized at $150,000.  Among the assets was the Fifth Avenue building, on which a large mortgage was owing and $35,000 in whiskey stocks in warehouses.  Shortly thereafter, however, business began to turn sour apparently forcing Schmidt to draw money to pay creditors out of the corporation to the tune of $52,213 (equiv. to almost $1.2 million today).  Eventually the situation led to his filing for bankruptcy.

These withdrawals might have gone unremarked as the bankruptcy proceeded had it not been for J. F. Erny, a cashier at Pittsburgh’s German American Savings and Deposit Bank who saw a chance to make a quick buck.  He enticed the bank to sell its 50 shares of liquor company stock to him for $100, then sued Schmidt and the other directors — the family members — claiming the $5,000 face value on the certificate.  Erny’s case centered on the money Schmidt had taken out of the corporation, an act he characterized as fraudulent.

The Supreme Court of Pennsylvania dismissed Erny’s case.  The judges noted that Schmidt’s withdrawals were part of his effort to save his business and only a minor amount had gone to “private purposes.”  Moreover, the owner had kept strict accounts of the withdrawals and their rationale, and that the directors (family members) were completely in favor of his efforts.  Erny had bought the shares two years after the bankruptcy, the court pointed out, and had no cause for complaint.  It charged him and fellow plaintiffs court costs.

Nevertheless, the bankruptcy proved extremely costly to Schmidt.  The building that he had so carefully designed and that once bore his name had to be sold.  Stocks of aged whiskey that he owned were required to be sold at a fraction of their value to pay off creditors.  With his family still behind him, however, George persevered.  He moved to a smaller space in the Bessemer Building on Duquesne Way at Sixth (Federal) Street, shown here, and continued in the whiskey trade.  

In April 1905 another blow fell on the Schmidt family.  The eldest son and heir apparent to the liquor business, George Jr., died, only 30 years old.  He was a veteran, having served as with Company H of the Pennsylvania Voluntary Infantry in World War One.  A younger son, Erhard, was taken into the business and eventually raised to the position of vice president. 

Schmidt continue the business strategies that once had proved so successful. To match the competition for liquor sales in Pittsburgh, he issued shot glasses with his Bessemer Building address.  For1918 Christmas holidays he issued an attractive painting under glass flask featuring a comely young woman.  It may have been farewell gesture because within months he had closed down the George W. Schmidt Co. and retired from the liquor trade.

This whiskey man lived another twelve years, until 1930 — long enough to see National Prohibition imposed but not repealed.  Age 86 and plagued in his latter years with a chronic heart condition, Schmidt was interred in Pittsburgh’s at the family plot in Section N of St. Mary’s Cemetery.  George’s grave is adjacent to his son.  His wife, Ellen, would join him there nine years later.

The Schmidt liquor house, despite taking blows, survived from 1832 to 1918.   From the founder, William, down through Joseph and on to George, the House of Schmidt experienced the Civil War, several 19th Century financial panics, and most traumatic of all, a bankruptcy.   A twenty year run usually meant success for a liquor house.  The Schmidts’ enterprise survived for 82.  The reasons for its longevity were rooted in the fabric of the Schmidt clan.  It truly was all about family.

Note:  The material for this post was gathered from numerous references, with the principal one — and the source of all quotations —  the "Pittsburgh and Allegheny Illustrated Review: Historical, Biographical and Commercial,” published by J M Elstner & Co., Pittsburgh, PA., in 1889.



































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