Whiskey Men Hounded by Tax Collectors

Foreword:  Almost from the outset of the Republic, the Federal Government has collected taxes on the production of whiskey.  George Washington himself rode out to help put down the Pennsylvania “Whiskey Rebellion” of farmer/distillers objecting to federal taxation.  For many years the principal revenue stream into Washington, D.C., came from taxing liquor.  Shown here is a $500 whiskey revenue stamp.  Before and even after passage of the Bottle-in-Bonding Act of 1897 by Congress, tax collectors could use their authority to harass and even bring ruin to distillers.  Recounted here are three examples of government overreach.

William McRoberts, an immigrant from Northern Ireland, found considerable initial success as a distiller and wholesale liquor dealer from Cincinnati.  When the Civil War ended, McRoberts built a distillery near Latonia Station, on the Louisville Short Line & Kentucky Central Railroads, located about four miles south of Cincinnati.  Known on Federal rolls as RD #2, 6th District of Kentucky, McRoberts designated this plant the Willow Run Distillery.  His success was such that he was able to build his family the mansion home, shown below.

Fire was to be McRoberts’ undoing.  Just after Christmas 1867, a conflagration ignited at the distillery, destroying the plant.  Storage areas held 9,000 barrels of highly flammable whiskey that fueled a fire so intense that the stone walls of the building crumbled.  The loss to McRoberts and his partner was set at $450,000, equivalent to more than $9 million today.  Although insurance paid $200,000, the remainder came from the owners’ pockets Undeterred by this setback,  McRoberts immediately rebuilt. 

His fire precautions proved unavailing.  In 1869 McRoberts suffered a second major fire, again with great monetary loss.  This time he lacked the resources to rebuild.  He sought to recoup from the Federal government the amount he already had paid in taxes for the now destroyed whiskey, but was refused.  Prior to passage of the Bottled-in-Bond Act of 1897, distillers were taxed on product immediately after it was put in barrels and stored for aging.  

Eventually McRoberts sued in Federal Court for a refund, triggering a tense confrontation with authorities.  In 1870 a Federal liquor gauger/inspector named Mohan had a heated argument with McRoberts, attacked him with a knife and was arrested.  In the end the distiller was forced to sell his mansion, his wife left him taking their two children, and he faced financial ruin.  When McRoberts died in 1875 at the age of 52 following a train accident that cost him both legs, his lawyers were still arguing unsuccessfully for a refund.

Fast forward eighteen years.  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, he deserved a better fate. 

In 1893, Sheaffer’s 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, in effect accusing Sheaffer of arson.  He took them to court and won.

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 demanded immediate payment of the tax on the whiskey that had been destroyed in the fire, assessing the debt at $45,166, equivalent today to about $1 million.  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.  In desperation, the Pennsylvania distiller stole some cattle, sold them, and was caught.

With his reputation in Lancaster now besmirched, Sheaffer almost certainly knew and dreaded what  would come. In 1897 Federal authorities seized all Sheaffer’s business properties, including the distillery, the warehouse, its contents, and his shoe store.  Jacob had borrowed almost $15,000 from relatives and friends to rebuild his distillery; now he met to inform them he was forced to default on their loans.  The cumulation of these events threw  Shaeffer into deep despair and impaired his health.  A year later at age 52, he died.

Outraged at what had occurred, his relatives appealed to Washington for redress.  A Pennsylvania senator in 1903 introduced a sympathetic bill that asked the U.S. Court of Claims to determine compensation for the injustice. It passed. The Court agreed that a mistake had been made and that recompense was due. It awarded the Sheaffer estate $34,055.  Unfortunately, the money ceded to Sheaffer’s family could not bring Jacob back from the early grave to which his own government seemingly had hounded him.  

Mark Twain called it a “ten million dollar swindle.”  The U.S. Commissioner of Revenue saw it as the answer to preventing the government from being deprived of “a vast amount of revenue” through frauds committed by liquor distillers. They both were referring to the spirits meter invented by a New York mechanical engineer.  Peoria, Illinois, liquor dealers Adolphus and Julius Nusbaum were typical of the hundreds caught up in the Tice Meter controversy.

The story began in 1867 when evidence emerged that the U.S. Government was being cheated out of tax money through frauds committed by distillers, often in collusion with dishonest inspectors.  For the Commissioner of Revenue the answer was to improve measuring liquor output by means of meters attached to stills that reputedly would aid inspectors in detecting gross understatement of the amount of spirits manufactured.  After a competition, it selected the design offered by Isaac P. Tice. Called the Tice Meter, the patent design is shown below.  The Treasury subsequently demanded that all distillers and rectifiers in the U.S. buy the expensive device. This included the Nusbaum brothers.  

It did not take long for the Commissioner of Revenue to begin having doubts about the utility of the Tice Meter and an expert commission was appointed to make a series of practical tests.  When the report came in negative, the Treasury Department in 1871 discontinued requiring use of the device, claiming to have found a more accurate meter than Tice’s.  In the meantime, hundreds of distillers and rectifiers had been forced to buy them — and now the Tice meters had been trashed.  Some distillers asked for a payback from Congress.  A bill approving repayment was vetoed by President William McKinley.  Another recourse was to the courts, the path taken by the Nusbaums.  They sued Enoch Emory, the U.S. collector of revenue for the Chicago district in Federal District Court to recover the $1,500 they had sent him to pay for the Tice meter for use in their whiskey blending operation.  Today that cost would be equivalent to at least $33,000. 

Emory’s lawyers argued that the money was Tice’s and not his and implied the Nusbaums should be litigating against Tice. The judge agreed and threw out the brothers’ case.  At that point, the now wiser Nusbaums ceased their efforts at repayment and took their losses.  By 1873 — just two years later — they shut the doors on their Peoria liquor house and went out of business, likely agreeing with Mark Twain about the “ten million dollar swindle.”

Note:  More extensive articles on each of these whiskey men can be found elsewhere on this blog:  William McRoberts, November 19, 2016;  Jacob Schaeffer, January 22, 2016; and the Nusbaum Bros., January 29, 2018.

  

Addendum:  This is to alert both followers of this blog and others that I have a new website involving whiskey.  It is a compilation of more than thirty vignettes about Old West saloons and saloonkeepers.  Outlaws, gunslingers, and shootings abound.  This new blog can be accessed at wet enterprise: select saloons of the old west@blogspot.com. If this new site proves popular, other compilations under the “wet enterprise” heading may be forthcoming.

Whiskey Men Who Began as Draymen

Foreword:  Although the word “drayman” today usually describes only brewery deliverymen, historically a drayman was the driver of a dray, a low, flat-bed wagon without sides, pulled by horses or mules, that transported a range of goods, including barrels of whiskey.  Some individuals who came to own major distilleries and liquor houses began their careers in the whiskey trade by driving a dray. The stories of four of them follow.

William McRoberts, an immigrant from Ireland who settled in Cincinnati about 1853, landed a job as a drayman for a local wholesale liquor house known as Boyle, Miller & Company.  In this role McRoberts became a cog in the “Underground Railroad,” smuggling escaping slaves to freedom in the North and safety in Canada.  A key to freedom was escaping the borders of slave states; crossing the Ohio River was a major objective.  Ohio was the closest state to Canada with only about 250 miles from the Kentucky border to Lake Erie and safety.

People who guided slaves from place to place were called “conductors.”  McRoberts was a conductor with excellent opportunities.   Among his duties was traveling by horse and wagon over the Ohio River to distilleries in Kentucky and bringing barrels of whiskey back to Cincinnati.  On his return McRoberts would halt his team at an isolated spot and another conductor would help him load a slave, or perhaps two, into whiskey barrels that he would cart back across the river and offload at the distillery. After dark the escapees would be spirited north to another “station” on the way to Canada.

My assumption is that the distillery owners were aware of the scheme and approved.  All were taking a risk. If discovered, the distillery would have had its wagon, horses and cargo confiscated.  McRoberts would have faced fines, jail, and possible physical harm.  Never caught, the Irishman eventually took over Boyle Miller, and rose to become a notable American distiller.  Crushed in a train accident, McRoberts died in January 1876 at the age of 52.

Another Irish immigrant who rose from hauling whiskey barrels to running his own distillery was Arthur McGinnis of Baltimore.   McGinnis’ intelligence and “go getter” attitude as a drayman brought him to the attention of John B. Brown, the owner of a successful liquor outfit Brown had founded in 1869.  

After hiring McGinnis as a driver in the mid-1880’s Brown brought him inside and taught him the liquor business. By 1895 the name of the firm had become Brown, McGinnis & Company.  McGinnis’s three sons -- John, James and Patrick -- all became involved in the business. Brown’s name eventually disappeared entirely and the A. McGinnis Company of Baltimore emerged. 

McGinnis reorganized the company and invested $5,000. With the new infusion of funds McGinnis built a distillery adjacent to the Western Maryland Railroad at a place located four miles from Westminster, Maryland, that came to be known as McGinnis Siding,  McGinnis corporate offices remained in Baltimore, first at 208 Lexington Av. and then in the American Building downtown, shown here.   After Arthur died in 1905 his sons carried on the distillery.  

Being a drayman for a wholesale liquor dealer in the late 1800s was a highly difficult and taxing job. He was required to manage a team of horses hauling a large wagon filled with barrels of whiskey and heavy crates that he usually was required to load and unload by himself.  Benjamin F. Hollenbach was such a driver and he ultimately drove himself into the ownership of the Reading, Pennsylvania, whiskey house for which he labored. 

Born in Pennsylvania and given only an elementary education, Hollenbach was seventeen when he arrived in Reading and was hired as a driver by George W. Hughes who owned a wholesale liquor business founded in 1869.  Hughes saw potential in young Benjamin as someone who handled his responsibilities with a maturity that belied his age.  Before long he brought the youth into the store as a clerk.  

Two years later Hughes died and his son-in-law R. H. Jones took over management of the firm.  Not long after, however, Jones also died.   Hughes’ widow was left with a business to run and she turned to the trusted clerk.  Still in his early 20’s,  Ben Hollenbach took over running the firm.   For four years he managed the liquor dealership for the widow under Hughes name.  As the company prospered Ben saved his money and in 1900, with a partner, he bought her out and became the co-owner and senior partner.  The business now became Hollenbach & Dietrich and the flagship brand, "Social Rye."

The company proved to be a highly prosperous enterprise.   A contemporary account noted the following:   “The firm...does a large business, handling nothing but the finest wines and whiskies, and they are the proprietors of the well known ‘Social Rye,’ handled by the trade all over the country.”  At the time of his death in 1915 Hollenbach had become recognized throughout the region for his business acumen and his leadership in fraternal and social organizations. 

Born on a farm in 1850 in Wayland, New York, John Rauberhad limited formal education.  Farm life apparently had little or no appeal and at sixteen in 1866 he gravitated the fifty miles to Rochester.  There Rauber found work as a drayman for the Rau Brewery.  According to a biographer:  “Active and diligent he won the esteem of his employers and gained promotion from time to time with a corresponding increase of wage that at length enabled him to save a sufficient amount to engage in business on his own account.” 

With the arrival of his brother, Peter, in Rochester the two youths almost immediately launched a liquor house called P. F. Rauber & Bro.  According to a 1918 History of Rochester and Monroe County:  “From the beginning the new enterprise proved a profitable one — a fact which was due to the excellence of their product and also to the fact that they were ever found reliable and trustworthy in business transactions.”  

After 18 years as co-owner of the Rauber liquor house in April 1896 Peter died at the early age of 38, leaving a young widow and three minor children.  With his brother's death, John Rauber became the sole proprietor of the liquor firm and changed its name to his own.  He lived only an additional sixteen months, dying in August 1897 at the age of 47. His eldest son took over management of the business.

With John Rauber’s death came warm tributes in his memory.  The former drayman was hailed as an individual who had made many friends in both the business and social world and was particularly known as a benefactor of the children of Rochester.  One encomium ended:  “In matters of citizenship he was progressive and public spirited and gave active support to many measures for the public good. It is thus that the community lost a citizen it had learned to value.” 

With only limited education and few resources each of these men began their careers driving a horse and wagon. By dint of intelligence and hard work each rose to prominence because of their leadership in the liquor trade.  While managing successful enterprises, these former draymen also played significant roles in their communities and were acknowledged for their positive influence on their times.

Note:  More complete profiles of each of these four whiskey men can be found elsewhere on this website:  William McRoberts, November 19, 2016; Arthur McGinnis, August 25, 2011; Benjamin Hollenbach, March 18, 2013; and John Rauber, February 12, 2017.  

William McRoberts: A Story in Five F’s

Escaping a brutal famine in Ireland, bringing slaves to freedom, experiencing two family tragedies while rising to become among America’s most notable distillers, while experiencing disastrous fires, and subsequently facing financial struggles, William McRoberts lived the kind of story from which novels are made.  

Famine: McRoberts was born in 1824 in Dundonald, County Down, now Northern Ireland, the bucolic village shown above located not far from Belfast.  His parents were William McRoberts Sr., the son of John McRoberts and Margaret McLean, and Anna Moore, a daughter of Robin Moore.  The family home was at Ballyoran.  Shown right, the McRoberts house was a substantial ivy-covered residence bespeaking some affluence.  Surrounded by six brothers and sisters, William likely knew a relatively tranquil childhood.

That picture changed abruptly in the 1840s while McRoberts was still in his teens.  The failure of the potato crop, the primary food staple of the Irish people, caused widespread starvation, death, and massive migration from the Emerald Isle.  The McRoberts family is said to have scattered over the world to Canada, the U.S. and Australia.  William was among those who came to America, likely aboard one of the so-called “famine ships,” that crammed hundreds of people into cramped spaces for a rough two-weeks on the Atlantic.  He eventually found his way to Cincinnati.

Freedom:  When McRoberts next surfaced in the public record he was working for a Cincinnati wholesale liquor house known as Boyle, Miller & Company.  Steven S. Boyle, like McRoberts, was an immigrant from Ireland. About 1853 he gave young William a job as a “drayman,” driving a horse-drawn wagon.  In this role McRoberts became a cog in the “Underground Railroad,” smuggling escaping slaves to freedom in the North and safety in Canada.

A key to freedom was crossing the border of slave states; the Ohio River was a major objective.  By the first decades of the 1800s, every state in the North had legally abolished slavery, including border states like Ohio, Indiana and Illinois.  Ohio had the most active escape network with around 3,000 miles of routes used by runaways.  It also was the closest state to Canada with only about 250 miles from the Kentucky border to Lake Erie and safety.

People who guided slaves from place to place were called “conductors.”  McRoberts was a conductor with excellent opportunities. Among his duties was traveling by horse and wagon over the Ohio River to nearby distilleries in Kentucky, bringing barrels of whiskey back to Cincinnati.  Somewhere on his return McRoberts would halt his team and another conductor would help him load a slave, or perhaps two, into whiskey barrels that he would then cart back across the river and offload at Boyle Miller.  After dark, the escapees would be spirited up to another “station” likely at Auburn Hills, Ohio, on the way to Canada.

What was McRoberts motivation?  My first assumption is that Steven Boyle was aware of the gambit and approved.  Both men were taking a risk. Boyle could have had his wagon, horses and cargo confiscated.  McRoberts would have faced fines, jail, and possible physical harm if caught.    William’s wife, Mary Harriet Conway, may have been an abolitionist influence. He had married her in Cincinnati in 1850, a Presbyterian minister presiding.  Recorded as Boyle’s drayman from 1853 to 1859, McRoberts had the opportunity to assist dozens of escapees until the outbreak of the Civil War that eventually ended the need for the “Railroad.”

Family:  The 1860 census found William, with his Irish-born wife, Mary Harriet Conway, living in Cincinnati with four children, three girls and a boy, ages 9 to 1; a fifth child, a boy, would be born later that year.  With them was William Conway, 14, attending school, a younger brother of Mary Harriet.  William’s occupation was given in the census as “clerk,” having been raised by Boyle to a position inside his whiskey operation.  By the following year, the obviously talented McRoberts had been moved up to foreman. He also must have been investing in the distillery.  Upon Boyle’s death in 1865 McRoberts became its principal owner in partnership with Hamilton Miller.

When the Civil War ended McRoberts wasted no time in expanding his distilling activities.  He built a second distillery near Latonia Station, on the Louisville Short Line & Kentucky Central Railroads, located about four miles south of Cincinnati.  Known on Federal rolls as RD #2, 6th District of Kentucky, McRoberts designated this plant the Willow Run Distillery. Much later he installed his son-in-law, Thomas Hewitt, as the manager. Under the leadership of McRoberts, who has been described as a “master distiller,” the fortunes of Boyle, Miller continued to rise.

Amid all this success, there was tragedy.  In January 1864 the McRoberts’ youngest daughter, Harriet only five years old, died of burns and was buried in Sec. 46, Lot 23, Spring Grove Cemetery.  Not long after, the date uncertain, Mary Harriet herself died, her burial place still unidentified.  This left William with four children under the age of 16 to care for.  Seemingly looking for a mother for his brood, he remarried in 1866.

McRoberts’ second wife was Ellen “Ella” Barker, the daughter of a highly privileged family from Peoria, Illinois.  Nineteen years younger than her husband, Ella had been sent to the exclusive Maplewood School for young ladies in Pittsfield, Massachusetts, and was accustomed to spending summers at a seaside cottage near Boston.  William may have met her through her father, Gardner Thurston Barker, a well-established Peoria distiller.  After the marriage Barker made McRoberts a partner in his company.  The couple would have two children of their own, both boys.  When his eldest son from Harriet Conway, Gavinus, came of age, William brought him into the distillery business.

In 1867  McRoberts bought seven acres on Grandin Road in the Walnut Hills area of Cincinnati.  There for $30,000 ($750,000 today) he built a large home for Ella and the children on what would become known as Cincinnati’s “Millionaires Row.”  As can be seen above, it was a spacious dwelling with a large wrap-around porch, doric columns and a mansard roof, forming a very attractive residential dwelling. 

Fire:  Fire was an ever present problem for liquor enterprises.  While McRoberts was still working as a drayman, a serious fire broke out at Boyle’s Wholesale Liquors, located at 53 East Second Street, recorded by the Cincinnati Firefighters Diary.  The loss from this blaze was set at $150,000, equivalent to more than $3.5 million today and three firefighters were hurt.  Without any real proof, it occurs to me that this fire could have been set.  Southern sympathizers called “Copperheads” were rife in Cincinnati and, if they had known about the company help to escaping slaves, might well have torched the building.

Just after Christmas 1867, with McRoberts in charge, fire visited the premises of the distillery, destroying the plant.  Its storage areas held 9,000 barrels of highly inflammable whiskey that fueled a fire so intense that the stone walls of the building crumbled.  The Spencer House hotel at the rear was seriously threatened but saved by fire crews. One firefighter was injured. The loss to McRoberts and his partner was set at $450,000, equivalent to more than $9 million today.  Although insurance paid $200,000, the remainder came from the owners’ pockets. 

Undeterred by this setback,  McRoberts immediately began to rebuild.  Only a few months later a newsman from the Cincinnati National Union visited the site and reported that:  “This establishment has, Phoenix-like, arisen from its ashes and is again in full blast and in complete running order.”  Introduced to McRoberts, who possibly escorted him through the distillery, the journalist was shown a enormous still in operation, the first of three scheduled to be installed.  He reported that the stills would make Boyle, Miller “the most extensive distillery in the United States.”

The reporter paid particular attention to the problem of fire:  “Although this portion of the building cannot be said to fire proof, extra and unusual precautions have been taken in its erection against probable fire.”  Among these were pipes in the walls extending from the first to fourth floors,a few feet apart. The ideas was that flames would be drawn through them like chimneys and escape at the top without injury to the walls.

Financial Struggles:  Those precautions proved unavailing.  In 1869 Boyle, Miller suffered a second major fire, again with great monetary loss.  This time McRoberts lacked the resources to rebuild.  He sought to recoup from the Federal government the amount he already had paid in taxes for the now destroyed whiskey, but was refused.  Prior to passage of the Bottled-in-Bond Act of 1897, distillers were taxed on product immediately after it was put in barrels and stored for aging.   Such taxes were a principal sources of federal revenue until a national income tax was imposed in 1913.  Eventually McRoberts sued in Federal Court for a refund.

Authorities were highly skeptical about claims from distillers experiencing fires.  In some cases, owners had been known clandestinely to cart their barrels to a new location, torch their plant, and ask for a refund on taxes paid.  While no such suspicion fell on McRoberts, the situation could lead to high tension.  In 1870 a Federal liquor gauger/inspector named Mohan had a confrontation with McRoberts, attacked him with a knife and was arrested.

Meanwhile, the Northern Irish immigrant was struggling financially.  By 1871, McRoberts’ partnership with Hamilton Miller had been dissolved and Boyle, Miller & Co. ceased being listed Cincinnati directories.  The same year he sold his Walnut Hill mansion and an indeterminate amount of acreage for what appears to  have been a “bargain basement” price,  With a partner named Todd, he retreated to Boyle’s former location at 53-55 East Second Street, running both a liquor store and a second enterprise, W. McRoberts & Co., listed as manufacturers of coloring and flavoring for liquors.  All the while he was paying lawyers in a vain attempt to retrieve his whiskey tax.

According to a descendant, during this period of financial struggle, Ella McRoberts began to spend more and more time in Peoria with her parents.  At some point she left for good, taking her two sons with her.  Whatever the emotional toll of this desertion, it pales with the suffering McRoberts met in July 1875.  While boarding a train he lost his footing and fell under the car.  The wheels passed over his leg and abdomen in what appeared to be a fatal accident.  McRoberts, however, survived almost five months with his injuries, dying at his home on McMillan Street in January 1876 at the age of 52.

His funeral was held at home, arranged by Thomas Hewitt and a friend and liquor dealer, Edmund Amann,   The Members of the Walnut Hills Knights of Pythias held a special ceremony in honor of their brother member the same day at their Castle Hall.

While his family and friends gathered at his graveside McRoberts was laid to rest in Section 46, Lot 23, of Spring Grove Cemetery not far from his daughter Harriet.  The family monument is shown here.

It is unclear whether Ella returned to Cincinnati for his funeral.  McRobert’s obituary makes no mention of her.  She continued to live in Peoria for the rest of her life, never remarrying, raising her sons and being active in community affairs until she died in 1923 and was buried near her parents.  With William’s death the family settled the long-running dispute with the federal government over the tax issue.

Within the space of a single vignette, it is scarcely possible to reflect the full character of an individual.  The years between McRobert’s arrival in the U.S. and working for Boyle in Cincinnati are largely a blank.  There are no clues to how William worked his way up from drayman to owner in just six years, or clues to his evident business sense and entrepreneurship.  It is unclear whether his financial struggles of the 1870s should be laid to the aftermath of the fire, to effects of the Panic of 1873, or to some other cause.  What we know of McRoberts, particularly his audacity and courage in helping escaping slaves, makes us want to know more.

Note:  This post was researched from a wide number of resources.  A vignette on the Amanns of Cincinnati can be found on May 6, 2017.