Foreword: The heyday of attempts at monopolies in the America whiskey trade was relative short. Two were important: A Midwest “Trust” organized in 1887 and centered in Illinois that failed by 1898 through bad management and a Kentucky/New York cartel begun in the 1890s that flourished until about 1910, then essentially stalled. Remnants, however, hung around until 1920 when National Prohibition was imposed. Among the many problem the Trusts faced was active opposition by distillers and whiskey “rectifiers” (blenders) to their attempts to “corner the market” and drive up liquor prices. Below are brief stories of whiskey men who opposed the monopolists and helped bring them down.
Described by his hometown newspaper as “irrepressible” and “indispensable,” to the Kansas City business community, Max Reefer, shown here, had been in the liquor business for three years when the first Whiskey Trust appeared. An immigrant from Austria, he began his career in the U.S. as an advertising guru. After the birth of his first child in 1863, Reefer with his family moved from St. Louis 250 miles west across Missouri to Kansas City. There, at the age of 33, he set up a liquor house, calling it “Green Mountain Distillery.” His business plan was to advertise his whiskey repeatedly in national magazines where he emphasized mail order sales. The plan worked and Reefer built a large clientele.
He soon came in conflict with the Whiskey Trust. Reefer was not a distiller, but a “rectifier,” that is, receiving whiskey by the barrel, blending it on his premises, and bottling it under his own label for shipping. Rectifiers often found themselves at the mercy of the Whiskey Trust. The Trust controlled a large percentage of existing whiskey stocks and hiked prices to the blenders. If they refused to pay, they ultimately ran out of raw product, adding to whiskey shortages — the delight of the Trust. As Reefer knew, the Trust would have been very happy to put Green Mountain and its owner out of business.
Reefer struck back. Apparently able to obtain enough liquor for his blends, he advertised vigorously that he could undersell the Trust. “The whiskey we send is distilled from the purest grain (no seconds), is matured and ripened in wood and will cost you but a few cents over $2.00 per gallon. We guarantee that no Trust house ever sold the same quality goods for less than $3.00 to $4.00.” He went a step further by stating his anti-Trust views on his whiskey labels. To his dying day at age 68 in 1916 Reefer maintained his attack on the Trusts and likely watched with some glee as th declined.
A major target of the monopolists were Kentucky distillers, among them J. W. Morton Field of Owensboro. His small distillery, shown below, had attracted the attention of the KY/NY Trust. “Front men” offered to buy 3,000 barrels of whiskey from J. W. M. Field & Sons over five years and then, under specified conditions, an additional 5,000 barrels annually over the next ten years. Field could produce only 500 barrels for his own use and sale. If he exceeded that amount, he would pay a penalty of $5 per barrel. Believing there would be great advantage in having a guaranteed customer for his whiskey for 15 years, the Owensboro distiller agreed.
As the Trust’s power grew, some Kentucky distillers had begun to balk at the idea of a whiskey monopoly. Field was among them. When the pseudo buyers demanded he agree to transferring his contract to the Trust, he said an emphatic NO. In retaliation for Field’s refusal, they refused to take any more of his production, leaving the Owensboro distiller with unsold stocks. Seemingly with no other choice, Field sued in 1902. He had the wisdom to hire as his attorney, William Lindsay, a former chief justice of the Kentucky Supreme Court. Although the suit was filed in the U.S. Circuit Court in New York, not in Kentucky, Lindsay persuaded the jury to give the distiller a judgment for damages in the amount of $50,000 (equiv. $1.25 million today). It was a decisive blow against the Trust.
Although J.W.M. Field & Co had won, the joy of victory was short-lived for Mort Field. In August of 1903, he died at the age of 58. Moreover, family elation at having beaten the monopoly was short-lived when the “deep pockets” Trust appealed the decision to the U.S. Circuit Court of Appeals. This time Lindsay was not as effective. That panel decided that the whiskey the Fields could not sell and had stored in his warehouses actually was an asset, gaining value as it aged. Thus no damage had been done to the Owensboro distiller. The court nixed the payment and called for a new trial. There is no evidence that it ever occurred.
The Wathen family were whiskey pioneers in Kentucky whose interaction with the KY/NY Trust, known officially as the Kentucky Distilleries and Warehouse Company, were, simply put, “convoluted.” Three Wathen brothers in 1880 built a large distillery in Louisville. They experienced great success and reinvested in the company by installing one of the first continuous column stills in Kentucky and steam heat in the warehouses. J. A. Wathen joined his brothers in 1887 to manage the facility.
In April, 1899, for reason unknown, the Wathens sold the distillery to the Trust. After the sale J. A. Wathen stayed with organization as an employee. In a gambit that likely occasioned uncomfortable sibling interactions, his brother J. B. Wathen masterminded the formation of a new distillery for his young sons – called “R. E. Wathen & Co.” named after his eldest boy, only 22 at the time. This facility immediately began to compete with Trust. The new Wathen distillery used the brand names “Ky. Credential” and “Honeycomb.” Those labels sounded suspiciously like the brand names “Ky. Criterion” and “Honeymoon,” that the Wathen family had sold to the Trust along with their distillery.
In 1901 the Trust asked for an injunction on the Wathens’ further use of the brands. During the trial the Trust’s lawyers conceded that the liquor wholesalers and others obtaining these products likely were not confused by the similarity of names used by the new Wathen distillery, but argued that the labels still represented an infringement. In an expansion of brand name rights, the court agreed, enjoining the Wathens from using “Ky. Credential” and “Honeycomb.” The ruling held that the brands unfairly impinged on the brands just acquired by the Trust, “even though consumers were not necessarily deceived.”
Although the Wathens had lost this fight, as author Brian Haraa has expressed it, the family had administered the Trust “a clear “poke in the eye.”
Note: The Wathen story is adapted from a post by Atty. Brian Haraa on his “Sippin’ Corn” blog. Brian graciously agreed to my reprinting his piece on this blog where it appeared August 1, 2020. He treats the Wathen family at greater length in his informative 2018 book, “Bourbon Justice: How Whiskey Law Shaped America.” Longer accounts appear at this website on Max Reefer, March 17, 2019, and J.W. Morton Field, January 31, 2016.
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